Amazon-iRobot deal scrapped after EU challenge

Amazon is scrapping its planned takeover of vacuum maker iRobot following opposition from EU competition authorities.

The companies said in a joint statement that they were "disappointed" but there was no clear regulatory path for the purchase of the Roomba maker.

First announced in 2022, the deal would have been one of Amazon's largest ever acquisitions.

The end of the deal is a major blow for iRobot, which has announced job cuts.

The robot vacuum maker has seen sales decline and it said it would immediately embark on a restructuring, which will see 350 jobs axed, or 31% of its staff.

The company is also shrinking its office footprint and scaling back spending on research. Its chief executive is also leaving.

In the announcement, the companies said the decision to scrap the deal was mutual and Amazon would pay the previously agreed $94m break-up fee.

Amazon said the outcome was an indication that regulatory decisions to block mergers in the name of increasing competition and protecting consumers from monopolies were backfiring.

"This outcome will deny consumers faster innovation and more competitive prices, which we're confident would have made their lives easier and more enjoyable," said David Zapolsky, Amazon senior vice president and general counsel.

He said mergers are intended to help companies like iRobot compete with rivals.

"Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition - the very things that regulators say they're trying to protect."

Shares in iRobot tumbled more than 15% on the news. They are down by more than 50% so far this year.

Amazon's pursuit of iRobot was intended to help it expand its range of smart-home appliance offerings. It had originally proposed to pay $1.7bn (£1.3bn), reducing that price last year amid delays.

In the UK, the Competition and Markets Authority (CMA) gave the deal the all-clear last year, finding that Roomba's place in the UK market was "modest" and that it already faced several significant rivals.

But European competition authorities were worried that iRobot's tie-up with Amazon would make it difficult for other vacuum-makers to compete, especially if Amazon were to give the Roomba benefits over rivals on its e-commerce site.

The data collected by Roomba had also raised questions.

The European Commission opened a formal investigation last year and had a deadline of 14 February to make its decision. It indicated earlier this month it was prepared to block the deal.

The takeover also faced scrutiny in the US, where officials in the Biden administration have been taking a harder line on mergers, challenging high-profile deals in the airline industry, as well as pushing back against the tech giants.

That strategy has been controversial and only sometimes successful. Microsoft took US authorities to court after they tried to block its merger with Activision Blizzard gaming. That deal has since gone through.