New Delhi

Amazon and iRobot have abandoned their $1.4 billion merger plans, citing opposition from both EU and US antitrust regulators.

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This is based on a Reuters report.

The decision follows concerns raised by EU antitrust chief Margrethe Vestager, who revealed that an in-depth investigation indicated the acquisition "would have enabled Amazon to foreclose iRobot's rivals by restricting or degrading access to Amazon stores."

Amazon's General Counsel, David Zapolsky, expressed disappointment, stating, "We're believers in the future of consumer robotics in the home and have always been fans of iRobot's products."

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In response to the collapsed merger, iRobot has announced a significant restructuring plan, aiming to reduce costs.

As part of this plan, approximately 31 per cent of iRobot's workforce, equivalent to 350 jobs, will be cut.

Additionally, founder Colin Angle has stepped down as the CEO of the Roomba robot vacuum manufacturer, with Angle and the board mutually agreeing that a new leader with turnaround experience would better serve iRobot in the face of current challenges.

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The termination of the merger deal comes after the EU and US antitrust regulators raised concerns about potential anti-competitive practices.

The EU antitrust chief, Vestager, explained that the preliminary investigation suggested Amazon's acquisition of iRobot could have resulted in adverse effects on competition.

Vestager highlighted concerns that Amazon might delist rival robot vacuum cleaners, reduce their visibility, or raise advertising costs for competitors on Amazon's marketplace, particularly in key European markets.

The Federal Trade Commission (FTC) in the US was also set to reject the deal, planning to recommend a legal challenge to block the acquisition before the companies officially abandoned it.

While Amazon expressed disappointment over the deal's failure, iRobot faces financial implications.

The robot vacuum manufacturer anticipates reporting a 25 per cent reduction in full-year 2023 revenue, amounting to $891 million, with an expected loss between $265 and $285 million.

As per the terms of the merger agreement, Amazon will pay iRobot a termination fee of $94 million. iRobot shares experienced a 7.2 per cent drop in afternoon trading on Monday, continuing a downward trend since the EU regulators' initial reports about potential blocks two weeks ago.

In contrast, Amazon shares saw a rise of nearly 1 per cent.

(With inputs from Reuters)