iRobot Craters as EU Plans to Block Amazon AcquisitionJan 25, 2024
Antitrust pressure is actually becoming effective in 2024
iRobot shares fell over 30% after credible reports came to light suggesting that the EU was about to block Amazon’s planned acquisition of the vacuum company. Let’s unpack the damage:
iRobot stock has already been suffering thanks to public comments from the European Union’s antitrust group back in November. The European Commission announced that the acquisition raised ‘competition concerns’ that would need to be addressed. Now, according to a report from the Wall Street Journal, the EU Commission met with Amazon and iRobot officials yesterday to try and hammer out some of those concerns. Instead of smoothing over those issues, it appears that the meeting may have killed the deal.
Amazon has slowed their acquisition spree over the last few years, and this iRobot buyout was significant given how much the Roomba-maker completely owns their niche. The EU blocking this deal would effectively kill it—but the EU doesn’t have to deliver a full ruling here until February 14th.
WHY IT MATTERS
After a U.S. judge ruled in favor of the DoJ—blocking the JetBlue & Spirit Airlines merger—this move by the EU signals a potential paradigm shift in the antitrust space. With a big antitrust trial set for Apple later in the year and Google losing their Epic Games lawsuit, investors are now paying a lot more attention to anticompetitive lawsuits. In the end, while blocking this iRobot deal hurts in the short term, applying antitrust pressure to the market tends to create shareholder value over time. For now, iRobot shares fell over 35% in early trading, adding to yesterday’s 14% decline.