Shares of Roomba maker iRobot plunge on report that Amazon deal faces EU block By Reuters

© Reuters. FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, March 1, 2023. REUTERS/Johanna Geron/File Photo

(Reuters) – IRobot shares fell 35% in premarket trading on Friday following reports that European Union antitrust regulators plan to block Amazon.com’s (NASDAQ:) $1.4 billion acquisition of the Roomba vacuum maker.

The Wall Street Journal (WSJ) reported that Amazon was informed that the deal would likely be rejected at a meeting with the European Commission, the European Union’s executive body, on Thursday.

The U.S. tech giant did not offer relief until a Jan. 10 deadline to address regulators’ concerns that the deal could reduce competition and strengthen Amazon’s dominance of its e-commerce platform.

Amazon agreed to acquire iRobot (NASDAQ:) in August 2022 to bolster its portfolio of smart devices, including Alexa voice assistants, smart thermostats, security devices and wall-mounted smart displays.

Analysts said the possibility of the deal being blocked could weigh on iRobot’s prospects as an independent company.

“Regulators have little interest in iRobot’s health and financial prospects,” said Gil Luria, an analyst at DA Davidson & Co.

“They believe they are preventing big tech companies from harming consumers by not allowing them to acquire companies and making the sector less competitive.”

Meanwhile, the high likelihood of rejection would make it the second tech deal to hit regulatory hurdles in recent weeks. Adobe (NASDAQ:) scrapped its $20 billion deal with design software maker Figma in December, citing “no clear path” to antitrust approval.

Amazon cut its offer by about 15% in July after iRobot took on new debt. That month, the EU warned Amazon that the deal, which British regulators approved, could reduce competition.

IRobot’s stock had lost more than half its value by Thursday’s close since the deal was announced.

The final closing price of $23.62 is well below the revised price of $51.75 per share that Amazon agreed to pay.

The European Commission has until February 14 to approve or reject the deal.