iRobot and Amazon withdraw, terminate acquisition agreement

Amazon has ended its bid to buy robot vacuum cleaner maker iRobot after running into tough problems with European regulators.

IN press release, the companies said they see «no path to regulatory approval in the European Union,» preventing them from moving forward. Amazon and iRobot have mutually terminated their previously announced acquisition agreementwhich would see Amazon buy iRobot for ~$1.7 billion in cash (or somewhat lower).

«We are disappointed that Amazon’s acquisition of iRobot could not proceed,» David Zapolsky, Amazon SVP and general counsel, said in a press release. “We believe in the future of consumer robotics in the home and have always been fans of iRobot’s products, which delight consumers and solve problems in ways that improve their lives. Amazon and iRobot were excited to see what our teams could build together, and we are deeply grateful to everyone who worked tirelessly to try to make this collaboration a reality.”

iRobot will receive a $94 million termination fee from Amazon as a result of the rejected offer. But the canceled acquisition will also require an «operational restructuring plan,» iRobot said he saysincluding laying off roughly 350 iRobot employees — roughly 31% of the company’s workforce — by the end of March.

That restructuring comes on top of cuts iRobot made shortly after the acquisition deal was announced. In an attempt to reduce his considerable debt, iRobot has cut its workforce twice — once in August 2022 and again in February 2023.

Colin Angle, iRobot’s chairman and CEO, has stepped down as president and CEO, and Glen Weinstein, iRobot’s executive vice president and chief legal officer, has been named interim CEO. Andrew Miller, the lead independent director of iRobot’s board of directors, has been named chairman of the board, and iRobot has hired a «turnaround expert,» Jeff Engel, to lead the implementation of the restructuring.

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«iRobot is a powerful company, and its mission remains to change the world by empowering people to do more,» Angle said on LinkedIn publish. “It is home to talented builders, optimism, opportunity and unbridled determination and resilience. To those with whom I have shared this journey, I am forever grateful. I look forward to serving as a senior advisor and remaining on the board during my current term.”

iRobot aims to save $80 million to $100 million through renewed contracts with manufacturing partners under more attractive terms; $20 million through increased offshoring; and $30 million by consolidating its sales and marketing spend. The company also plans to reduce its corporate real estate footprint and pause all work related to «non-floor care innovations,» including air purification, robotic lawn mowing and education.

iRobot expects the restructuring to cost between $12 million and $13 million, primarily for severance and layoff-related costs, during the first two quarters of 2024, with the majority expected in the first quarter.

Amazon’s mega-boom iRobot business has attracted regulatory scrutiny from the start. While the UK ultimately approved the acquisition after initial reluctance, the European Commission pushed forward with a deeper probewhile in the USA it is the Federal Trade Commission muddled official job investigation.

Amazon has insisted that it will not negatively impact the robot vacuum market, while assuring regulators that it will not favor iRobot products over competitors through its massive retail presence.

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