IRobot to cut 31% of workforce due to failed Amazon deal
OAN’s James Meyers
11:46 AM – Monday, January 29, 2024
Roomba-maker iRobot has announced that the planned deal to be acquired by Amazon will not be completed, resulting in the company announcing they will be laying off 31% of its workforce.
In a press release, the two companies claimed the European Union was set on blocking the deal and that there was “no path to regulatory approval,” according to the Wall Street Journal.
The proposed acquisition by Amazon of iRobot “has no path to regulatory approval in the European Union,” preventing both companies from moving forward with the transaction − “a loss for consumers, competition, and innovation,” the joint statement reads.
The 31% or almost 350 employees being let go from iRobot also caused the company’s CEO, Colin Angle to announce he would be stepping down.
The announcement comes after Amazon agreed to buy iRobot in August 2022, for $1.7 billion.
“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon SVP and General Counsel released in a statement. “We’re believers 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’re deeply grateful to everyone who worked tirelessly to try and make this collaboration a reality.”
Additionally, Amazon will pay iRobot a $94 million termination fee for the failure of the deal.
“iRobot expects to record restructuring charges totaling between $12 million and $13 million, primarily for severance and related costs, over the first two quarters of 2024, with the majority of the restructuring charges anticipated in the first quarter of 2024.”
iRobot has announced that most employee layoff notifications will take place by March 30th.
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How will the failure of the acquisition impact iRobot’s workforce and leadership?
IRobot, the maker of the popular Roomba robot vacuum, has announced that its planned acquisition by Amazon will not be completed. As a result, the company has stated that it will be laying off 31% of its workforce.
According to a press release from both companies, the European Union was set to block the deal, leading to the decision to abandon the acquisition. The Wall Street Journal reported that there was “no path to regulatory approval” for the deal.
In a joint statement, the two companies expressed their disappointment, stating that the failed acquisition is a “loss for consumers, competition, and innovation.” They had hoped to bring together their respective expertise in consumer robotics to create innovative products for the home.
The layoffs at iRobot will result in nearly 350 employees losing their jobs. In addition, the company’s CEO, Colin Angle, has announced that he will be stepping down. This news comes as a blow to both the impacted employees and the company as a whole.
Amazon, as a gesture of compensation, has agreed to pay iRobot a termination fee of $94 million for the failed deal. However, despite the financial compensation, the loss of the acquisition has undoubtedly affected both companies.
In response to the news, David Zapolsky, Amazon’s SVP and General Counsel, expressed disappointment, stating that they were believers in the future of consumer robotics and had always been fans of iRobot’s products. He also expressed gratitude to everyone who had worked towards making the collaboration a reality.
The failed acquisition is a setback for both iRobot and Amazon. iRobot had anticipated the benefits of being acquired by a company as large and influential as Amazon, while Amazon had seen potential in iRobot’s consumer robotics technology. Unfortunately, the deal was thwarted by regulatory hurdles.
As the dust settles on this failed acquisition, iRobot must now navigate the task of restructuring and adjusting its business strategy. The company expects to incur restructuring charges of between $12 million and $13 million, primarily for severance and related costs, in the first two quarters of 2024.
While the future remains uncertain for iRobot, it is clear that the company will need to refocus its efforts and find new avenues for growth. As for Amazon, it will need to explore other opportunities to expand its presence in the consumer robotics market.
The failed acquisition serves as a reminder that even well-established companies are not immune to challenges and obstacles. As the business landscape continues to evolve, companies must be prepared to adapt and persevere in the face of adversity.
Overall, the collapse of the iRobot acquisition by Amazon represents a significant setback for both companies. It not only impacts their immediate plans but also raises questions about the future of consumer robotics and the potential for further consolidation in the industry. Only time will tell how both iRobot and Amazon will recover from this setback and pursue their respective paths forward.
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