iRobot Shares Drop 17% on EU Warning of Amazon’s $1.7B Acquisition Concerns

Thomas

November 28, 2023

iRobot shares experienced a significant 17% drop on Monday. Additionally, this decline was in response to warnings from the European Union’s antitrust watchdog regarding Amazon’s proposed $1.7 billion acquisition of the Roomba maker. The European Commission, after conducting an in-depth probe initiated in July, expressed concerns that the deal might lead to restricted competition in the robot vacuum cleaner market. Furthermore, the EU is set to make a ruling on the matter by Feb. 14. Moreover, it stated that Amazon could potentially hinder iRobot rivals’ access to its online platform, raising additional apprehensions in the market.

Amazon, undeterred by the warnings, asserts that the acquisition of iRobot will benefit consumers by fostering innovation and lowering prices. The company claims that iRobot, facing stiff competition in the vacuum cleaner industry, stands to gain from Amazon’s resources.

The U.S. Federal Trade Commission is also scrutinizing the acquisition, while the U.K.’s Competition and Markets Authority, having reviewed the deal in June, found no substantial impact on competition within the U.K.

The EU Commission’s update on Monday highlighted potential actions that Amazon might take to limit iRobot’s rivals; additionally, the measures could include delisting or reducing the visibility of their products online. Moreover, the concern revolves around the possibility of Amazon economically benefiting from hindering iRobot’s competition..

Despite the concerns raised, iRobot shares had surged by an impressive 39% on Friday, driven by reports indicating unconditional EU antitrust approval. However, the EU Commission’s subsequent warning led to a brief halt in iRobot shares.

Amazon, working in collaboration with the Commission, is addressing the concerns identified in the ongoing probe. The company remains optimistic about the deal, emphasizing its potential to drive innovation and bring down prices for consumers.

As the EU Commission anticipates announcing a ruling on the Amazon-iRobot deal by Feb. 14, both iRobot and Amazon are navigating a complex landscape of regulatory scrutiny. The market watches closely, considering the potential implications for competition and innovation in the rapidly evolving field of robotics and smart home devices. Investors, consumers, and industry observers eagerly await the resolution of this high-stakes acquisition.

Conclusion:

IRobot’s shares saw a significant 17% decline due to EU concerns over Amazon’s $1.7 billion acquisition. As the EU Commission awaits a ruling by Feb. 14, regulatory scrutiny continues. Investors closely monitor the unfolding situation, anticipating potential impacts on competition and innovation in the robotics market.