Amazon.com Inc. and Roomba parent iRobot Corp. said Monday they are terminating their planned acquisition agreement because they believe there’s no path to regulatory approval in the European Union, sending iRobot’s stock sharply lower.
“We’re disappointed that Amazon’s
AMZN,
acquisition of iRobot
IRBT,
could not proceed,” said David Zapolsky, Amazon senior vice president and general counsel.
This outcome “will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” he added.
The Wall Street Journal reported earlier in January that Amazon representatives had met with officials from the European Commission to discuss the deal and were told that it would likely be rejected.
The companies announced the deal in August with Amazon planning to pay $61 a share in cash for each iRobot share owned in a deal that valued the maker of robotic cleaning products at about $1.7 billion, including debt.
iRobot’s stock tumbled 21% early Monday, and is down 56% in the year to date, while the S&P 500
SPX,
has gained 2.5%.
The company announced a restructuring as its seeks to stabilize its operations and focus on profitability and advancing key growth initiatives. The restructuring will lead to about 350 job cuts, equal to 31% of its workforce as of year-end.
The Bedford, Mass.-based company is expecting a fourth-quarter loss of $265 million to $285 million and for revenue to fall 25% to $891 million from the year-earlier period.
The company ended fiscal 2023 with $185 million in cash. Amazon will pay iRobot a $94 million termination fee, some $35 million of which will be used to repay a term loan.
It said Chief Executive Colin Angle is stepping down as CEO and chairman and will replaced by Glen Weinstein, executive vice president and chief legal officer, as interim CEO.
The restructuring is aiming to generate about $80 million to $100 million savings and to cut R&D costs by about $20 million through increased onshoring of non-core engineering functions to lower-cost regions.
The company will centralized marketing activities to cut costs by about $30 million and will shrink its real-estate footprint.
“We are disappointed with the company’s 2023 performance — but our focus turns now to the future,” said Andrew Miller, chairman of the board.
