• iRobot shares drop 36% as EU likely blocks Amazon’s $1.4B Roomba deal.
• Amazon fails to address competition concerns.
• Second tech deal faces EU hurdles; Adobe scrapped $20B Figma deal in December.

In a significant blow to both iRobot (IRBT.O) and Amazon.com (AMZN.O), iRobot’s shares tumbled by 36% in premarket trading on Friday following reports that the European Union antitrust regulator is poised to reject Amazon’s $1.4 billion buyout of the popular Roomba vacuum maker.

The Wall Street Journal revealed that during a meeting on Thursday between Amazon and the European Commission, the EU’s executive arm, Amazon was informed of the likely rejection of the deal. The Commission expressed concerns that the acquisition could reduce competition and further solidify Amazon’s dominance in the e-commerce platform.

Despite a deadline set for January 10, Amazon reportedly failed to provide satisfactory remedies to address the regulator’s apprehensions. The proposed acquisition, announced in August 2022, was aimed at expanding Amazon’s range of smart devices, which includes the Alexa voice assistant, security devices, smart thermostats, and wall-mounted smart displays.

This setback marks the second major technology deal to face regulatory obstacles in recent weeks. In December, Adobe (ADBE.O) abandoned its $20 billion deal with design software maker Figma, citing the lack of a clear path for antitrust approvals in Europe and the UK.

Regulators are growing increasingly concerned about the potential concentration of customer data and market control by a few large companies through the acquisition of smaller rivals. The EU had previously warned Amazon in July that the iRobot deal, despite approval from UK regulators, could lead to a reduction in competition within the market.

Amazon had already reduced its offer by approximately 15% in July after iRobot accrued additional debt. Since the deal was first announced, iRobot’s shares have experienced a significant decline, falling by 53%.

The European Commission has until February 14 to make a final decision on whether to approve or reject the deal, further adding to the uncertainty surrounding the future of the strategic acquisition.

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