IRobot Stock Hit By EU's Competition Concerns About Amazon Deal

The European Commission, which was probing Amazon.com Inc.’s proposed $1.7 billion acquisition of consumer robot company iRobot Corp., said it has competition concerns regarding the deal.

Following the news, the shares sank 17.2 percent on Monday’s regular trading on Nasdaq to close at $34.35. However, in the after-hours trading, the shares gained around 2.5 percent, and in pre-market activity on Tuesday, the stock is up 2%.

It was in August that Amazon announced an agreement to acquire iRobot for $61 per share in an all-cash transaction valued at approximately $1.7 billion, including debt.

Amazon provides an online marketplace, which allows retailers to advertise and sell products including robot vacuum cleaners or RVCs. iRobot, which manufactures RVCs, sells them also through Amazon’s online marketplace.

In a statement of objections, the European regulator now said it has informed the tech major of its preliminary view that the proposed acquisition of iRobot may restrict competition in the market for RVCs.

On July 6, the Commission opened an in-depth investigation to assess if Amazon’s acquisition of iRobot may restrict competition in the market for the manufacturing and supply of RVCs, as well as allow Amazon to strengthen its position in the market for online marketplace services to third-party sellers.

According to the Commission, Amazon may restrict competition in the European Economic Area or EEA-wide and/or national markets for RVCs, by hampering rival RVC suppliers’ ability to effectively compete.

The Commission said the proposed transaction was notified to it on June 1, and the in-depth investigation regarding the deal was opened on July 6. Now there is time until February 14, 2024 to take a final decision.

Following the companies’ deal, the U.S. Federal Trade Commission in late September had requested them for more information on the tech giant’s buyout of the Roomba vacuum maker.

It was reported earlier that more than two dozen groups wrote to the FTC alleging the deal could help Amazon “entrench their monopoly power in the digital economy.”

The UK’s Competition and Markets Authority or CMA also had launched a probe into the proposed acquisition of iRobot by Amazon. However, the British antitrust regulator later cleared the proposed deal noting that it would not lead to competition concerns in the UK.

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