Amazon has ended its bid to acquire iRobot, the maker of robotic vacuums, after running up against stiff headwinds with European regulators.
In a press release, the companies said that they saw “no path to regulatory approval in the European Union,” preventing them from moving forward. Amazon and iRobot mutually agreed to terminate their previously-announced acquisition agreement, under which Amazon would’ve purchased iRobot for ~$1.7 billion in cash (or slightly lower).
“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon SVP and general counsel, said in a press release. “We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products, which delight consumers and solve problems in ways that improve their lives. Amazon and iRobot were excited to see what our teams could build together, and we’re deeply grateful to everyone who worked tirelessly to try and make this collaboration a reality.”
iRobot will receive a $94 million termination fee from Amazon as a result of the nixed bid. But the cancelled acquisition will also necessitate an “operational restructuring plan,” iRobot says, involving laying off roughly 350 iRobot employees — roughly 31% of the company’s workforce — by late March.
That restructuring comes on top of cuts iRobot made shortly after the acquisition deal was announced. In an attempted to reduce its substantial debt, iRobot cut headcount twice — once in August 2022 and again in February 2023.
iRobot’s shares fell about 16% in premarket trading in New York this morning.
Colin Angle, iRobot’s chairman of the board of directors and CEO, has stepped down as both chairman and CEO, and Glen Weinstein, iRobot’s EVP and chief legal officer, has been appointed interim CEO. iRobot lead independent board director Andrew Miller has been appointed chairman of the board, and iRobot has hired a “turnaround expert,” Jeff Engel, to lead implementation of the restructuring.
“iRobot is a powerful company, and its mission remains to change the world empowering people to do more,” Angle said in a LinkedIn post. “It’s the home to talented builders, to optimism, to possibility and to unbridled determination and resilience. To those I have shared this journey with, I am forever grateful. I look forward to serving as a senior advisor and remaining on the board through my current term.”
iRobot aims to save $80 million to $100 million through renewed agreements with manufacturing partners on more attractive terms; $20 million through increased offshoring; and $30 million by consolidating its sales and marketing spending. The company also plans to reduce its corporate real estate footprint and pause all work related to “non-floorcare innovations,” including air purification, robotic lawn mowing and education.
iRobot anticipates the restructuring will cost between $12 million and $13 million, primarily for severance and expenses related to the layoffs, over the first two quarters of 2024, with the majority expected in Q1.
Amazon’s megabucks iRobot deal attracted regulatory scrutiny from the start. While the U.K. ultimately approved the acquisition after initial reluctance, the European Commission pushed ahead with a more in-depth probe, while in the U.S., the Federal Trade Commission mulled an official investigation into the deal.