Roomba-maker iRobot stock plunges after Amazon deal axed, layoffs hit

After two years of battling antitrust scrutiny on two continents, Amazon and iRobot have agreed to cancel the tech giant’s $1.9 billion acquisition of the robot vacuum company. In a joint statement today, the companies acknowledged they saw “no path to regulatory approval in the European Union.”

It’s the end of what became an increasingly icky deal for almost everyone involved. Regulators in Europe were expected to approve or deny the bid by February 14, after weighing whether Amazon’s ownership of the Roomba brand represented a threat to market competition. But their concerns echoed similar fears raised by the U.S. Federal Trade Commission (FTC).

Meanwhile, iRobot shares have been in a sort of free fall since Amazon’s deal was struck—from $59.54 in August 2022, after news broke, to below $40 a year later, down to $16.99 last Friday, and $13.80 today.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” senior vice president and general counsel David Zapolsky said in Amazon’s statement released today. “This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable.”

Amazon’s failed acquisition joins a string of other big mergers that have cracked under antitrust scrutiny: JetBlue and Spirit’s, Penguin Random House and Simon & Schuster’s, Adobe’s attempt to buy Figma for $20 billion, Nvidia’s $40 billion bid for fellow semiconductor company Arm.

However, Amazon and iRobot’s odds of prevailing started to look precarious months ago. The European Commission warned Amazon and iRobot in November that a merger seemed like it would hurt European competitors. Amazon’s marketplace is responsible for a significant chunk of robot vacuum sales, and regulators essentially said they needed reassurance that Amazon wouldn’t rig the site to give its newly acquired brand an unfair advantage, “leading to higher prices, lower quality, and less innovation for consumers.”

During all this, Amazon has said little except for the occasional generic statements, such as reiterating corporate commitment “to supporting regulatory bodies in their work.” It blew off the press after missing the European Commission’s deadline earlier this month to offer up concessions.

But iRobot’s CEO Colin Angle, who had more to lose, issued a statement explaining that their side continued “to work cooperatively” with EU regulators and “we remain excited about the opportunity to work together with Amazon.”

With the deal now dead, Amazon doesn’t have to worry anymore about regulatory interference—although antitrust experts who were critical of the acquisition from the get-go have noted that, currently, an Amazon search for “smart doorbell” brings up Ring products and a giant Ring banner ad at the top of the page. (Amazon purchased Ring in 2018 for $1 billion; its founder departed both companies last May to become CEO of Latch, which is basically Ring but for door locks.)

Amazon—which has a $1.67 trillion market cap—must pay iRobot a $94 million termination fee, iRobot noted in a separate second statement that it put out today, noting this money will be used to pay down debt. That reportedly satisfies all of Amazon’s obligations.

The position the vacuum maker is left in, however, looks more precarious: Beyond the regulatory setback, it also stated that today Angle, who cofounded the company, has stepped down as CEO and chairman. The press release went on to tease a restructuring plan to “position” iRobot “for the future.” The plan includes eliminating all “non-floorcare” products (goodbye, Terra, the “fully autonomous” lawn mower), as well as “rightsizing” the business by subleasing parts of corporate headquarters, closing offices in “underperforming geographies,” and laying off around 350 employees—or 31% of the workforce.

An iRobot spokesperson referred Fast Company to this morning’s public statements, but declined to comment any further. Additional details about the restructuring plan will be announced during an upcoming earnings call on February 27, the spokesperson said.

It marks a big evolution. Once, iRobot aspired to be the brains of consumers’ homes, not just WiFi-connected vacuums. In a 2021 interview with Fast Company, Angle pitched a future where the Roomba morphed into a sort of household security guard on patrol that could adjust lights as occupants moved around and turn on air purifiers, as needed—basically a vacuum with Alexa. Less than a year later, Amazon negotiated its billion-dollar acquisition deal, and shortly after, observers began to spy ways iRobot’s mission was being reoriented around what might be a much simpler goal: selling Ring home-security subscriptions.

This followed a separate, internal tug-of-war over iRobot’s business direction. iRobot launched in 1990 and spent a decade building robots for the military. (Troops used them to clear landmines in Iraq, and they helped search the rubble at Ground Zero after 9/11.) iRobot’s president in 2003—a retired Navy vice admiral named Joe Dyer—later explained they’d pivoted to consumer vacuums after people on Wall Street asked, “What is it about capitalism you don’t understand?” By 2017, an activist shareholder tried to wrest control from Angle, accusing the executive team (which was comprised of engineers, not MBAs) of engaging in an “egregious and abusive use of shareholder capital” for sinking money into robotics R&D. That hedge fund manager argued they needed to be investing in buybacks that boosted iRobot’s stock value.

In today’s statement, iRobot described the agreement’s termination as “disappointing,” but didn’t call out the antitrust pushback specifically. It simply said it’s turning “toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better.”

The need to lay off almost one-third of the workforce was “difficult,” iRobot noted, but added this move “will enable us to chart a new strategic path for sustainable value creation, and that our customers around the world love.”

That path may or may not work, but one group at risk of losing in these big merger scenarios, no matter how they pan out, seems to be the workers. Microsoft, for example, completed its $69 billion acquisition of Activision last fall, celebrated as a singular recent success story. But then, last week, it made “the painful decision” to downsize the new gaming division by 8%, cutting 1,900 jobs, to “grow our business and support our strategy of bringing more games to more players around the world.”

After two years of battling antitrust scrutiny on two continents, Amazon and iRobot have agreed to cancel the tech giant’s $1.9 billion acquisition of the robot vacuum company. In a joint statement today, the companies acknowledged they saw “no path to regulatory approval in the European Union.”

It’s the end of what became an increasingly icky deal for almost everyone involved. Regulators in Europe were expected to approve or deny the bid by February 14, after weighing whether Amazon’s ownership of the Roomba brand represented a threat to market competition. But their concerns echoed similar fears raised by the U.S. Federal Trade Commission (FTC).

Meanwhile, iRobot shares have been in a sort of free fall since Amazon’s deal was struck—from $59.54 in August 2022, after news broke, to below $40 a year later, down to $16.99 last Friday, and $13.80 today.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” senior vice president and general counsel David Zapolsky said in Amazon’s statement released today. “This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable.”

Amazon’s failed acquisition joins a string of other big mergers that have cracked under antitrust scrutiny: JetBlue and Spirit’s, Penguin Random House and Simon & Schuster’s, Adobe’s attempt to buy Figma for $20 billion, Nvidia’s $40 billion bid for fellow semiconductor company Arm.

However, Amazon and iRobot’s odds of prevailing started to look precarious months ago. The European Commission warned Amazon and iRobot in November that a merger seemed like it would hurt European competitors. Amazon’s marketplace is responsible for a significant chunk of robot vacuum sales, and regulators essentially said they needed reassurance that Amazon wouldn’t rig the site to give its newly acquired brand an unfair advantage, “leading to higher prices, lower quality, and less innovation for consumers.”

During all this, Amazon has said little except for the occasional generic statements, such as reiterating corporate commitment “to supporting regulatory bodies in their work.” It blew off the press after missing the European Commission’s deadline earlier this month to offer up concessions.

But iRobot’s CEO Colin Angle, who had more to lose, issued a statement explaining that their side continued “to work cooperatively” with EU regulators and “we remain excited about the opportunity to work together with Amazon.”

With the deal now dead, Amazon doesn’t have to worry anymore about regulatory interference—although antitrust experts who were critical of the acquisition from the get-go have noted that, currently, an Amazon search for “smart doorbell” brings up Ring products and a giant Ring banner ad at the top of the page. (Amazon purchased Ring in 2018 for $1 billion; its founder departed both companies last May to become CEO of Latch, which is basically Ring but for door locks.)

Amazon—which has a $1.67 trillion market cap—must pay iRobot a $94 million termination fee, iRobot noted in a separate second statement that it put out today, noting this money will be used to pay down debt. That reportedly satisfies all of Amazon’s obligations.

The position the vacuum maker is left in, however, looks more precarious: Beyond the regulatory setback, it also stated that today Angle, who cofounded the company, has stepped down as CEO and chairman. The press release went on to tease a restructuring plan to “position” iRobot “for the future.” The plan includes eliminating all “non-floorcare” products (goodbye, Terra, the “fully autonomous” lawn mower), as well as “rightsizing” the business by subleasing parts of corporate headquarters, closing offices in “underperforming geographies,” and laying off around 350 employees—or 31% of the workforce.

An iRobot spokesperson referred Fast Company to this morning’s public statements, but declined to comment any further. Additional details about the restructuring plan will be announced during an upcoming earnings call on February 27, the spokesperson said.

It marks a big evolution. Once, iRobot aspired to be the brains of consumers’ homes, not just WiFi-connected vacuums. In a 2021 interview with Fast Company, Angle pitched a future where the Roomba morphed into a sort of household security guard on patrol that could adjust lights as occupants moved around and turn on air purifiers, as needed—basically a vacuum with Alexa. Less than a year later, Amazon negotiated its billion-dollar acquisition deal, and shortly after, observers began to spy ways iRobot’s mission was being reoriented around what might be a much simpler goal: selling Ring home-security subscriptions.

This followed a separate, internal tug-of-war over iRobot’s business direction. iRobot launched in 1990 and spent a decade building robots for the military. (Troops used them to clear landmines in Iraq, and they helped search the rubble at Ground Zero after 9/11.) iRobot’s president in 2003—a retired Navy vice admiral named Joe Dyer—later explained they’d pivoted to consumer vacuums after people on Wall Street asked, “What is it about capitalism you don’t understand?” By 2017, an activist shareholder tried to wrest control from Angle, accusing the executive team (which was comprised of engineers, not MBAs) of engaging in an “egregious and abusive use of shareholder capital” for sinking money into robotics R&D. That hedge fund manager argued they needed to be investing in buybacks that boosted iRobot’s stock value.

In today’s statement, iRobot described the agreement’s termination as “disappointing,” but didn’t call out the antitrust pushback specifically. It simply said it’s turning “toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better.”

The need to lay off almost one-third of the workforce was “difficult,” iRobot noted, but added this move “will enable us to chart a new strategic path for sustainable value creation, and that our customers around the world love.”

That path may or may not work, but one group at risk of losing in these big merger scenarios, no matter how they pan out, seems to be the workers. Microsoft, for example, completed its $69 billion acquisition of Activision last fall, celebrated as a singular recent success story. But then, last week, it made “the painful decision” to downsize the new gaming division by 8%, cutting 1,900 jobs, to “grow our business and support our strategy of bringing more games to more players around the world.”