iRobot loses $200M in value after EU issues 'preliminary view' of Amazon deal

Shares of iRobot Corp. fell sharply on Monday after the European Commission cited competition concerns in its preliminary review of the proposed merger with Amazon.com Inc. (Nasdaq: AMZN), which comes with a 15% price decrease announced over the summer.

iRobot shares closed down approximately 17%, giving the Bedford-based company around $957 million in market capitalization, a loss of close to $200 million in value.

The European antitrust regulator released a statement on Monday saying that the acquisition of iRobot (Nasdaq: IRBT) "may restrict competition in the market for robot vacuum cleaners."

In a so-called statement of objections, the European Commission pointed out that Amazon (Nasdaq: AMZN) "may have the ability and the incentive to foreclose iRobot's rivals by engaging in several foreclosing strategies."

Amazon may have the means to do so, regulators said, as the e-commerce giant's online marketplace is a "particularly important channel" to sell robot vacuum cleaners in France, Germany, Italy and Spain.

The EC said it informed Amazon of its preliminary findings, which are not necessarily its final say on the proposed deal. The EC has until Feb. 14 next year to make a final call.

Colin Angle, chairman and CEO at iRobot, said in an emailed statement to the Business Journal that iRobot is continuing to work cooperatively with the EC and other regulators in their review.

"Given the intense competition that iRobot faces, we are disappointed the EC has issued a Statement of Objections on the grounds that the proposed merger would restrict competition," Angle wrote. "We remain optimistic and excited about the opportunity to work together with Amazon to continue innovating, bringing valuable products to customers and making their lives easier.”

Amazon has a chance to respond to the raised objections and ask for an oral hearing.

A spokesperson for Amazon said in a statement Monday that it is focused on addressing the EC's questions and "any identified concerns at this stage."

"iRobot, which faces intense competition from other vacuum cleaner suppliers, offers practical and inventive products," the Amazon spokesperson said. "We believe Amazon can offer a company like iRobot the resources to accelerate innovation and invest in critical features while lowering prices for consumers.”

First announced over the summer of 2022, the Amazon-iRobot acquisition (which had an initial price tag of $1.7 billion) is facing intense regulatory scrutiny both in the U.S. and internationally.

The European Commission opened its in-depth review in July this year, about a month after the UK's antitrust regulator approved the transaction. Meanwhile, earlier this year Amazon said it filed substantial compliance with a second request it got from the Federal Trade Commission last September to do an in-depth investigation of the deal.

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