Update 1:50pm: Leads to Amazon comment.
iRobot (NASDAQ:IRBT) saw its stocks plummet 20%, shaken by the European Union’s warning about the potential $1.4 billion acquisition deal by Amazon (NASDAQ:AMZN).
“The European Commission has informed Amazon of its preliminary view that its proposed acquisition of iRobot may restrict competition in the market for robot vacuum cleaners (‘RVCs’),” the EC said in a statement on Monday concerning the regulator’s statement of objections over the transaction. The EC now has until Feb. 14 to make a final decision on the deal.
This comes in the wake of a Reuters report on Thursday that the planned $1.4 billion purchase of iRobot (IRBT), which makes the Roomba robot vacuum, was anticipated to receive unconditional EC approval. The news had propelled iRobot shares upward by almost 40% on Friday.
“As a result of this in-depth investigation, the Commission is concerned that Amazon may inhibit competition in the European Economic Area (‘EEA’)-wide and/or national markets for RVCs, by hampering rival RVC suppliers’ ability to effectively compete,” the EC said in its statement.
The European antitrust regulator announced in July that it had initiated an in-depth review into Amazon’s (AMZN) purchase of the robot vacuum cleaner. The UK’s antitrust regulator approved the transaction in June.
“We continue to work through the process with the European Commission and are focused on addressing its questions and any identified concerns at this stage,” an Amazon spokesperson told Seeking Alpha in an emailed statement. “iRobot, which faces intense competition from other vacuum cleaner suppliers, offers practical and inventive products. We believe Amazon can offer a company like iRobot the resources to accelerate innovation and invest in critical features while lowering prices for consumers.”
iRobot (NASDAQ:IRBT) was subjected to a second request from the Federal Trade Commission last September to undergo a more comprehensive review of the Amazon (AMZN) deal. Amazon confirmed in June that it had made substantial compliance with the FTC’s second request.
In August, Amazon (AMZN) revised its deal with the Roomba robot vacuum maker, reducing the price it was paying to $51.75 in cash from $61 when the deal was originally struck last year. iRobot holders voted again to approve the deal at a holder vote last month.