Why Is IRobot Stock Tumbling Friday?

IRobot Corp IRBT stock is plunging Friday as reports indicate the European Union regulators are looking to scrap the Roomba vacuum cleaner maker’s merger deal with Amazon.Com Inc AMZN.

Amazon’s attempt to acquire iRobot will likely be rejected by the European Commission, as indicated during a recent meeting. This decision, pending official confirmation by February 14, requires approval from the Commission’s top political leaders, who rarely go against such recommendations. 

Initially agreed in August 2022, the deal faces scrutiny over concerns that it could reduce competition in the robotic vacuum cleaner market.

The European Union’s investigation into Amazon’s proposed acquisition of iRobot, initially scheduled to conclude by December 13, was delayed for a thorough review. 

EU competition authorities expressed concerns that this deal could lessen competition in the robotic vacuum cleaner market. 

In response to iRobot’s increased debt, Amazon revised its offer, reducing the purchase price by about 15% to approximately $1.42 billion.

The Competition and Markets Authority (CMA) approved Amazon’s acquisition of iRobot in June 2023. 

In August 2022, Amazon shared plans to purchase iRobot for $1.7 billion. The deal passed regulatory scrutiny in the UK, with the CMA finding that it would not significantly reduce competition.

The authority assessed iRobot’s modest market presence and the limited impact of robot vacuum cleaners on the UK’s broader “smart home” market.

iRobot stock lost 52% in the last six months. Amazon gained over 13% during the same period.

In 2023, Adobe Inc ADBE and Figma agreed to terminate their $20 billion merger deal due to growing concerns over bagging regulatory clearances from the European Commission and the UK CMA.

Price Action: IRBT shares are trading lower by 37.1% at $14.85 premarket on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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