Amazon’s iRobot Deal Faces Likely Rejection From EU Competition Watchdog: Report – iRobot (NASDAQ:IRBT)

The European Union’s competition watchdog is set to reject Inc’s ambitious $1.7 billion acquisition of iRobot Corporation, the company behind the popular Roomba vacuum cleaners, according to sources close to the matter. This decision could potentially put a halt to one of Amazon’s major expansion moves.

The news of the likely rejection sent iRobot stock plummeting more than 40% in after-hours trading, following a 14.23% drop in the regular session. The European Commission, the EU’s executive arm, informed Amazon of the potential rejection during a recent meeting with company representatives.

To become official, the decision must gain the endorsement of the commission’s 27 top political leaders. It is rare for these leaders to overturn a recommendation from the competition commissioner, Margrethe Vestager. The final decision is expected to be made by February 14.

The commission had previously expressed concerns about the acquisition potentially limiting competition in the robotic vacuum cleaner market. Amazon’s failure to submit proposed remedies to address these concerns further complicates the situation. The company missed a crucial deadline last week to present these solutions to the commission.

While the European Commission has not yet commented on these developments, Amazon still has the option to withdraw from the deal. The acquisition was initially agreed upon in August 2022.

This potential rejection could have significant implications for Amazon’s expansion plans and its efforts to diversify its business. The company has been making strategic acquisitions to expand its reach in various industries, including retail, technology, and logistics. The acquisition of iRobot would have allowed Amazon to enter the growing market for robotic vacuum cleaners.

The European Commission’s decision reflects its commitment to maintaining fair competition in the European market. The commission closely scrutinizes major acquisitions to ensure they do not lead to monopolistic practices or hinder competition.

It remains to be seen how Amazon will respond to the potential rejection and whether it will explore alternative strategies to enter the robotic vacuum cleaner market. This setback could prompt the company to reassess its expansion plans and seek other opportunities for growth.

Overall, the rejection of Amazon’s bid to acquire iRobot by the European Union’s competition watchdog represents a significant obstacle for the tech giant. It highlights the challenges companies face when seeking to expand through major acquisitions, particularly in highly regulated industries. The outcome of this decision will have implications not only for Amazon but also for the broader landscape of competition in the European market.

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