Amazon just axed its plans to acquire a high-profile tech company

Amazon  (AMZN) – Get Free Report has a long history of vacuuming up companies in acquisitions, from Whole Foods and Audible to Zappos, Woot and Ring.

However, the e-retail giant has decided to pump the brakes on one of its more recent planned purchases. On Jan. 29 Amazon announced that it would terminate its pending acquisition of iRobot, the smart-vacuum manufacturer. It originally said on Aug. 4, 2022, that it would pay $61 a share, or $1.7 billion, for the company.

Related: iRobot plunges on worry Amazon deal may be killed by regulators

The decision is described as a mutual one, with both Amazon and iRobot expressing disappointment about the decision in separate statements. Amazon made general reference to previously reported news that the European Union intended to block the deal on competition grounds.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, senior vice president and general counsel at Amazon. “[iRobot’s products delight] consumers and solve problems in ways that improve their lives. … This outcome will deny consumers faster innovation and more competitive prices. …

“Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics. 

“Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition—the very things that regulators say they’re trying to protect.”

Colin Angle, iRobot’s founder, also had a few thoughts.

“iRobot is an innovation pioneer with a clear vision to make consumer robots a reality. The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better, and that our customers around the world love.”

Amazon paid iRobot a termination fee of $94 million for the canceled acquisition.

The announcement deals a blow to iRobot, which said on Jan. 29 that it would cut nearly a third (31%) of its workforce. The stock took a hit on Monday, at last check down 15% at $14.36 a share.

Customer concerns around iRobot rose in December 2022. MIT Technology Review published an article that claimed that the vacuums were filming inappropriate scenes and sending the data to Scale AI, a company that uses the images, along with video and audio data, to train artificial intelligence.

While the editorial didn’t hurt iRobot’s stock at the time, word of the EU blocking the Amazon acquisition did, sending the stock plummeting more than 50% in the month of January. 

Related Posts