IRobot IRBT-Q shares slumped more than 30 per cent in early trading on Friday after reports that the European Union antitrust regulator was planning to block Amazon.com’s $1.4-billion buyout of the Roomba vacuum maker.
Reuters reported, citing sources, that the agency was considering a veto on the deal, a move that could raise the bar for future Amazon acquisitions of online rivals. The news was first reported by the Wall Street Journal.
The U.S. tech giant did not offer remedies until a Jan. 10 deadline to address the regulator’s concerns the deal could reduce competition and reinforce Amazon’s e-commerce platform dominance.
Amazon AMZN-Q agreed to buy iRobot in August 2022 to beef up its portfolio of smart devices such as the Alexa voice assistant, smart thermostats, security devices and wall-mounted smart displays.
The potential blocking of the deal could weigh on iRobot’s prospects as a standalone company, analysts said.
“Regulators have little concern for iRobot’s health and financial outlook,” said Gil Luria, analyst at D.A. Davidson & Co.
“They believe they are preventing harm to consumers by not allowing big technology companies to acquire businesses and make those categories less competitive.”
Meanwhile, a likely rejection would make it the second tech deal to hit regulatory hurdles in recent weeks. Adobe in December scrapped its $20-billion deal for design software maker Figma, citing “no clear path” for antitrust approvals in Europe and the UK.
Amazon in July slashed its offer by about 15 per cent after iRobot incurred fresh debt. That month, the EU warned Amazon the deal, cleared by UK regulators, could reduce competition.
IRobot shares have lost more than 66 per cent since the deal was announced. At $16.27, they are trading at less than a third of the $51.75-per-share amended price that Amazon has agreed to pay.
The European Commission has until Feb. 14 to either approve or reject the deal.