Amazon abandons iRobot, leaving Roomba’s future uncertain

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amazon and irobot

In a joint announcement, tech giants Amazon and iRobot have revealed the termination of their previously agreed-upon acquisition deal initially announced on August 4, 2022. The proposed $1.4 billion acquisition faced obstacles from European Union (EU) regulators, leading to the decision to dissolve the agreement.

The deal, which aimed to facilitate Amazon’s investment in iRobot’s ongoing innovation and contribute to product price reductions, encountered opposition from the European Commission last November. Concerns were raised regarding potential competition restrictions in the robot vacuum cleaner market, as many of iRobot’s rivals also distribute their products through Amazon’s online platform. Regulators feared that Amazon’s control over the platform could result in the delisting or reduced visibility of competing robot vacuum cleaners, limiting competition and leading to adverse effects such as higher prices, lower quality, and decreased innovation for consumers.

Expressing disappointment, David Zapolsky, Amazon’s Senior Vice President and General Counsel, stated, “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.”

Zapolsky said that the deal termination is a missed opportunity for consumers to benefit from faster innovation and more competitive prices. He further stated that undue and disproportionate regulatory hurdles, particularly in fast-paced technology sectors like robotics, hinder acquisitions and harm both consumers and competition.

The cancellation of the deal will incur a $94 million termination fee for Amazon, directed towards iRobot. This payment will be used by iRobot to repay a $200 million loan obtained last year.

In response to the failed acquisition, iRobot is undergoing an operational restructuring to ensure stability and focus on profitability and growth in mid-tier and premium segments. As a result of the restructuring, approximately 350 employees, constituting 31% of the company’s workforce as of December 30, 2023, will face layoffs. Notifications to the affected employees are expected to be completed by March 30, 2024. The anticipated restructuring charges range between $12 million and $13 million.

At the same time, iRobot has announced a leadership transition as part of its restructuring efforts. Colin Angle, who served as Chairman of the Board of Directors and CEO, has stepped down from both roles. In his place, Glen Weinstein, the Executive Vice President and Chief Legal Officer of iRobot, has been appointed as the Interim CEO. Andrew Miller, the lead independent director of the Board, has taken on the role of Chairman of the Board.

The failed acquisition between Amazon and iRobot is part of a trend where significant tech deals have unraveled in recent years due to heightened global regulatory scrutiny. Adobe cancelled its $20 billion bid to acquire Figma last year under pressure from UK and EU regulators. Nvidia also withdrew from its $40 billion Arm deal, citing “significant regulatory challenges” in early 2022. Meta too faced obstacles in its attempt to acquire Giphy.

Read next: Deloitte acquires US-based Giant Machines to accelerate product delivery

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