iRobot (IRBT) Stock Plummets After Terminating Acquisition Deal with Amazon (AMZN)
Shares of iRobot (NASDAQ:IRBT) tumbled in premarket trading following the announcement that the robot maker and Amazon (NASDAQ:AMZN) have mutually agreed to terminate their acquisition deal. The stock was down 17.3% in early New York trading on Monday, reflecting investor disappointment with the failed agreement.
The decision to end the acquisition stems from the realization that the deal "has no path to regulatory approval in the European Union," as stated in an official announcement by Amazon. This unexpected hurdle forced the two companies to abandon the deal, much to the dismay of both parties.
"We're disappointed that Amazon’s acquisition of iRobot could not proceed," expressed David Zapolsky, Amazon's Senior Vice President and General Counsel. "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," he added.
Initially signed in 2022, the acquisition was intended to allow Amazon to invest in iRobot's ongoing innovation efforts and assist iRobot in offering its products at lower prices to customers. Under the terms of their agreement, Amazon will pay iRobot a termination fee of $94 million, allowing for an amicable conclusion to the failed deal.
In response to these developments, iRobot has announced a significant operational restructuring plan to navigate the current environment, including a major leadership change within the company. Notably, Colin Angle, who previously served as Chairman of the Board of Directors and CEO, has resigned from his roles as Chairman and CEO.
Taking Angle's place, Glen Weinstein, iRobot's Executive Vice President and Chief Legal Officer, has been appointed as the Interim CEO. Additionally, Andrew Miller, the lead independent director of the Board, has assumed the position of Chairman of the Board, marking a pivotal moment in the company's leadership structure.
As part of the operational restructuring, iRobot has also made the difficult decision to lay off 350 employees, which constitutes 31% of its workforce as of December 30, 2023. This significant reduction in the workforce is expected to result in restructuring charges of approximately $12 million to $13 million, primarily covering severance and related expenses, over the first two quarters of 2024, with the majority of expenses occurring in Q1 2024.
Following the announcement, Amazon's stock (AMZN) rose by around 0.5% in the premarket, amidst the fallout from the terminated deal. The future remains uncertain for iRobot as it navigates the aftermath of this failed acquisition and implements its restructuring plan to adapt to the changing landscape of the consumer robotics industry.
