The stock of iRobot Corp. fell on Monday after the company and Amazon.com Inc. terminated their acquisition agreement, casting a shadow over the future of the company best known for the Roomba self-driving vacuum cleaner.
The companies said they are terminating the $ 1.7 billion deal, announced in August, because they believe there’s no path to regulatory approval in the European Union.
“We’re disappointed that Amazon’s AMZN, +0.72% acquisition of iRobot IRBT, -6.68% could not proceed,” said David Zapolsky, Amazon senior vice president and general counsel.
This outcome “will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” he added.
The Wall Street Journal reported earlier in January that Amazon representatives had met with officials from the European Commission to discuss the deal and were told that it would likely be rejected. EU officials were concerned the deal would further strengthen Amazon’s marketplace in Europe and heighten competition for other online sellers of vacuum cleaners and appliances.
iRobot’s stock was last down 6% after falling more than 20% early Monday, and is down 59% in the year to date, while the S&P 500 SPX, +0.24% has gained 2.5%.
The company announced a restructuring as it seeks to stabilize its operations and focus on profitability and advancing key growth initiatives. The restructuring will lead to about 350 job cuts, equal to 31% of its workforce as of year-end.
The Bedford, Mass.-based company is expecting a fourth-quarter loss of $ 265 million to $ 285 million and for revenue to fall 25% to $ 891 million from the year-earlier period.
The company ended fiscal 2023 with $ 185 million in cash. Amazon will pay iRobot a $ 94 million termination fee, some $ 35 million of which will be used to repay a term loan.
As part of the restructuring, Chief Executive Colin Angle is stepping down as CEO and chairman and will replaced by Glen Weinstein, executive vice president and chief legal officer, as interim CEO.
The restructuring aims to generate about $ 80 million to $ 100 million in savings and to cut R&D costs by about $ 20 million through increased onshoring of non-core engineering functions to lower-cost regions.
The company will centralize marketing activities to cut costs by about $ 30 million and will shrink its real-estate footprint.
“We are disappointed with the company’s 2023 performance — but our focus turns now to the future,” said Andrew Miller, chairman of the board.
The company has named turnaround specialist Jeff Engel as chief restructuring officer to oversee the moves.
“The company will continue executing key strategic activities to support iRobot’s return to profitability, including increasing its brand recognition, driving product innovation and redesigning its go-to-market strategy,” it said in a statement.
Amazon’s stock was flat in early trade.