The proposed $1.4 billion deal by Amazon.com Inc. to acquire Roomba manufacturer iRobot Corp. is currently facing potentially significant roadblocks in the European market. The European Union’s (EU) antitrust arm has aired a list of competition concerns that could unravel the deal unless appropriately addressed by both parties involved.
The European Commission, headquartered in Brussels, issued a statement of objections on Monday highlighting how the projected agreement could likely impact the robot vacuum cleaner marketplace detrimentally. The e-commerce powerhouse, Amazon, might utilize this opportunity to solidify its stronghold in online marketplaces and other data-related services.
In response to the proposed deal, iRobot shares plunged 17% to $34.35 on Monday, marking the highest slump in nearly three years. Last week the share price had seen an upturn following a report by Reuters predicting the deal would get unconditional clearance.
The European Commission’s warning outlines potential negative consequences of the acquisition, such as Amazon’s potential to downplay other robot vacuum cleaners on its platform while promoting its own labeled products like ‘Amazon’s choice’ or those that ‘Work With Alexa.’ The Commission further noted that Amazon might find it “economically profitable” to block competitors.
While receiving a statement of objections signifies that the EU has serious reservations about a deal, most merging companies typically avoid getting blocked by addressing competition issues. Additionally, companies maintain the right to challenge the preliminary findings by the regulators either in writing or at a hearing.
However, this deal’s fate may wind up similar to Booking Holdings Inc’s €1.6 billion ($1.7 billion) deal for Sweden’s Etraveli Group, which the EU blocked in September. More recently, the EU also made known its concerns about Adobe Inc’s $20 billion purchase of Figma Inc.
A final decision whether the iRobot deal can proceed with certain concessions or faces rejection lies with the Commission, which has set a deadline of February 14 to make that call.
For more details, read the full report on Bloomberg Law.