Amazon’s $1.4 Billion iRobot Deal to Be Blocked by EU Antitrust Watchdog

amazon, microsoft, amazon’s $1.4 billion irobot deal to be blocked by eu antitrust watchdog

An employee cleans an iRobot Corp. Roomba display inside an Amazon.com Inc. 4-star store in Berkeley, California, U.S., on Friday, March 29, 2019. Amazon’s new franchise of retail stores, called Amazon 4-star, stock a potpourri of items with positive reviews on the company’s online retail site.

(Bloomberg) — Amazon.com Inc.’s proposed $1.4 billion acquisition of Roomba maker iRobot Corp. is expected to be blocked by the European Union’s antitrust regulator over concerns that the deal will harm other robot vacuum makers.

The e-commerce giant was told the deal was likely to be rejected at a meeting Thursday with officials from the European Commission, according to people familiar with the matter. A final decision still needs formal approval from the EU’s political leadership and is due by Feb. 14.

Amazon declined to comment. Shares in iRobot dropped by as much as 47% in after-hours trading.

The Wall Street Journal first reported the expected decision from the meeting.

The deal is likely to face opposition in the US as well. According to people familiar with the matter, the Federal Trade Commission has been drafting a lawsuit that would seek to block the acquisition. The FTC’s three commissioners haven’t yet voted on a challenge nor had a final meeting with Amazon to discuss the potential case, said the people, who asked not to be named discussing an ongoing probe.

It was widely expected that the EU commission would oppose the deal after it expressed concerns last month that Amazon might be tempted to use its dominant position as an online retailer to favor iRobot products over those of competitors. EU interim competition chief Didier Reynders said Amazon had to pledge fair treatment to all robot vacuums offered on its platform.

Amazon declined to make concessions to allay the EU’s concerns. Instead, the e-commerce giant is already prepping a legal challenge to the commission’s decision, according to a person familiar with the matter.

It would be the second major tech merger blocked in recent months by the EU regulator, which nixed Booking Holdings Inc.’s €1.6 billion ($1.7 billion) bid for Sweden’s Etraveli Group in September. Booking is appealing that decision.

The EU’s opposition to its iRobot acquisition highlights the tension between Amazon’s retail operations and its ambitions for the smart-home ecosystem built around its Alexa voice assistant. The FTC has also expressed concern that the deal would give Amazon too much control over the smart-home device market and potentially violate users’ privacy by giving the company access to data on their homes.

Analysts say the EU’s decision is a relatively minor setback for Amazon, which has the resources to pursue alternatives to the deal. “Amazon can continue to pursue a home connectivity strategy, even without iRobot,” Gil Lauria of D.A. Davidson & Co. said in an interview, adding, “This is a very small deal for a very large company.”

The stakes for iRobot are potentially greater. The company, which pioneered robot vacuums, has seen demand for its products fall by nearly half since a 2021 pandemic peak in the face of growing competition from lower-priced manufacturers. Shares in the company have been falling for months on fears that the deal would be blocked. Last year, it was forced to secure a $200 million financing facility, and Amazon cut its per-share offer by about 15%.

The EU’s decision again puts it at odds with the UK’s antitrust watchdog, which gave the deal the green light after finding it would have limited competitive impact on the British market. The UK Competition and Markets Authority also split with its European counterpart by approving the Booking deal and, at least initially, blocking Microsoft Corp.’s acquisition of Activision Blizzard Inc. The CMA later reversed its position on the Microsoft-Activision deal.

When Amazon announced its intention to buy iRobot in 2022, the acquisition was seen as a way for the e-commerce giant to expand its presence in the burgeoning market for smart-home gadgets. Besides baking its Alexa voice assistant into multiple devices, the company has fielded a personal robot named Astro.

Early in its development, Astro struggled to map and navigate homes with complicated or unusual layouts, something iRobot has been working on for years with Roombas. Astro remains available only to invited buyers more than two years after its introduction, and Amazon now plans to sell a security guard version to businesses, Bloomberg reported in November.

Though small for a company the size of Amazon, an iRobot acquisition would be the fourth-biggest in its history, trailing only its purchases of Whole Foods Market, movie studio MGM and the One Medical concierge healthcare service.

More broadly, Luria said the deal-making climate for Big Tech has soured. “It’s hard for large technology companies to acquire anything right now. And it’s likely to become harder. There’s a global – or let’s say at least a trans-Atlantic – alliance around preventing technology companies from expanding through acquisition, and thus limiting competition.”

(Updates with confirmation of meeting details and background.)

Most Read from Bloomberg

    ©2024 Bloomberg L.P.

    News Related

    OTHER NEWS

    Lawsuit seeks $16 million against Maryland county over death of pet dog shot by police

    A department investigator accused two of the officers of “conduct unbecoming an officer” for entering the apartment without a warrant, but the third officer was cleared of wrongdoing, the suit says. Read more »

    Heidi Klum shares rare photo of all 4 of her and Seal's kids

    Heidi Klum posted a rare picture with husband Tom Kaulitz and her four kids: Leni, 19, Henry, 18, Johan, 17, and Lou, 14, having some quality family time. Read more »

    European stocks head for flat open as markets struggle to find momentum

    This is CNBC’s live blog covering European markets. European markets are heading for a flat open Tuesday, continuing lackluster sentiment seen at the start of the week in the region ... Read more »

    Linda C. Black Horoscopes: November 28

    Nancy Black Today’s Birthday (11/28/23). This year energizes your work and health. Faithful domestic routines provide central support. Shift directions to balance your work and health, before adapting around team ... Read more »

    Michigan Democrats poised to test ambitious environmental goals in the industrial Midwest

    FILE – One of more than 4,000 solar panels constructed by DTE Energy lines a 9.37-acre swath of land in Ann Arbor Township, Mich., Sept. 15, 2015. Michigan will join ... Read more »

    Gaza Is Falling Into ‘Absolute Chaos,’ Aid Groups Say

    A shaky cease-fire between Israel and Hamas has allowed a surge of aid to reach Palestinians in Gaza, but humanitarian groups and civilians in the enclave say the convoys aren’t ... Read more »

    Bereaved Israeli and Palestinian families to march together in anti-hate vigil

    Demonstrators march against the rise of antisemitism in the UK on Sunday – SUSANNAH IRELAND/REUTERS Bereaved Israeli and Palestinian families will march together as part of an anti-hate vigil on ... Read more »
    Top List in the World