iRobot’s shares saw a significant drop of 38% during premarket trading on Friday following reports that the European Union’s antitrust regulator was poised to reject Amazon.com’s proposed $1.4 billion acquisition of the Roomba vacuum maker.
According to The Wall Street Journal, Amazon was informed of the likely rejection during its meeting with the European Commission on Thursday. The EU’s executive arm expressed concerns that the deal could reduce competition and further strengthen Amazon’s dominance in the e-commerce platform.
Amazon had until January 10 to propose remedies addressing the regulator’s concerns, but the company did not provide any such solutions.
Amazon’s initial announcement of its intention to purchase the robot vacuum company in August 2022 was part of its strategy to expand its range of smart devices, which includes products like the Alexa voice assistant, smart thermostats, security devices, and wall-mounted smart displays.
If the deal is indeed blocked, it would mark the second recent instance of a major tech acquisition facing regulatory obstacles. In December, Adobe canceled its planned $20 billion acquisition of design software maker Figma, citing a lack of a clear path to obtaining antitrust approvals in Europe and the UK.
Regulators have been increasingly concerned about the potential for large tech companies to acquire smaller competitors, giving them access to vast pools of customer data and consolidating their control over the market.
Amazon had already reduced its offer by approximately 15% in July 2022 following iRobot’s increased debt. During the same month, the EU had cautioned Amazon that the deal, although cleared by UK regulators, could lead to reduced competition in the market.
iRobot’s shares have experienced a 53% decline since the acquisition deal was initially announced. The European Commission is expected to make its final decision on the deal by February 14th.
