Amazon said Monday that it would not proceed with a planned vacuum cleaner acquisition i robotwith both companies saying in a statement there was “no path to regulatory approval for the deal.”
The Roomba maker too was announced will lay off 31% of its workforce, about 350 people, and that its chairman and CEO, Colin Angle, will resign effective immediately.
Shares of iRobot fell 10% in morning trading on the news.
The deal’s fate was plunged into uncertainty after the Wall Street Journal reported that the European Union would not offer regulatory approval.
The European Commission, the EU’s executive body, launched an investigation in July, saying the proposed deal could result in Amazon preventing iRobot’s rivals from competing on Amazon’s online marketplace. The panel argued that Amazon could delete or reduce the prominence of competing products in search results or elsewhere.
“Our in-depth investigation has preliminarily shown that the acquisition of iRobot would allow Amazon to foreclose iRobot’s competitors by limiting or degrading access to Amazon Stores,” said Margrethe Vestager, executive vice-president of the European Commission. He added that Amazon’s control of the market “could have limited competition in the market for robot vacuum cleaners, leading to higher prices, lower quality and less innovation for consumers.”
“We are disappointed that Amazon’s acquisition of iRobot could not proceed,” David Zapolsky, Amazon’s senior vice president and general counsel, said in a statement.
iRobot said it would focus on margin improvements, cut research and development spending and cease all work on “non-floor care” products, including its air purifiers and robotic lawnmowers.
“The resolution of the deal with Amazon is disappointing, but iRobot now looks to the future with a focus and commitment to continue building thoughtful robots and smart home innovations that make life better,” iRobot’s Angle said in a statement.
Amazon will pay iRobot a previously agreed-upon breakup fee of $94 million. The reported deal, first announced in 2022, would have initially valued iRobot at about $1.7 billion.
The robotic vacuum maker has a market capitalization of less than $400 million, following Monday’s news and earlier reports that the EU would move to block the deal.
In July, iRobot entered into a $200 million financing facility from The Carlyle Group to fund the company’s operations as a stopgap until the deal with Amazon closes.
Amazon declined to comment beyond the release.
Regulators around the world have stepped up scrutiny of big tech companies, citing potential anti-competitive effects. Amazon is also one of the subjects of a Federal Trade Commission investigation into investments and partnerships between Big Tech and artificial intelligence developers such as Anthropic and OpenAI.
In Europe, both Britain’s Competition and Markets Authority and the EU’s European Commission have delayed or halted several deals. these include Afterthe acquisition of Giphy, Adobecompleted the acquisition of Figma and of Microsoft investment in OpenAI, as well as Microsoft’s purchase of Activision Blizzard.
— CNBC’s Annie Palmer contributed reporting.
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