The e-commerce giant Amazon and the iRobot company have announced this Monday that they have reached an agreement to terminate the acquisition agreement announced in August 2022, according to which Amazon would have acquired iRobot in exchange for about 1.7 billion dollars (about 1.6 billion euros at the current exchange rate).
The companies consider that the operation does not have the possibility of achieving regulatory approval from the European Union.
Amazon will have to pay compensation of $94 million to iRobot for the breakdown of the operation.
Shares of the maker of Roomba automatic vacuum cleaners have plummeted this Monday.
The company has announced a restructuring plan with 350 layoffs, 31% of the workforce, and the CEO, Colin Angle, has submitted his resignation.
The deal, the companies maintain, would have allowed Amazon to invest in iRobot's continued innovation and support it in lowering prices.
Instead, the European Commission considered that the acquisition could allow Amazon to limit competition by preventing or hindering the marketing of rival vacuum cleaners on its website, or by restricting their compatibility with other home devices, such as Alexa.
“We are disappointed that Amazon's acquisition of iRobot could not be carried out,” said David Zapolsky, vice president and chief legal officer of Amazon, in a statement.
“We believe in the future of consumer robotics in the home and have always been fans of iRobot products (...).
“This outcome will deny consumers faster innovation and more competitive pricing, which we are sure would have made their lives easier and more enjoyable,” he added.
“iRobot is a pioneer of innovation with a clear vision to make consumer robots a reality,” said Colin Angle, founder of iRobot.
“The termination of the agreement with Amazon is disappointing, but iRobot is now heading into the future with the focus and commitment to continue building thoughtful robots and smart home innovations that make lives better, and that our customers around the world adore.”
The Bedford, Massachusetts-based manufacturer has notified the Securities and Exchange Commission (SEC) that it will implement an operational restructuring plan that is expected to include an overall reduction of approximately 350 employees, representing 31%. of the staff at the end of last year.
The company expects to record restructuring expenses of between $12 million and $13 million in the first two quarters of 2024, primarily for severance pay and related benefits.
The objective of the restructuring plan is to reduce costs to improve the company's profitability.
It will try to renegotiate agreements with suppliers to generate between 80 and 100 million dollars in savings.
There will be a reduction in R&D expenditures of approximately $20 million annually by offshoring non-core engineering functions to lower cost regions.
Global marketing activities will be centralized to reduce sales expenses by approximately $30 million annually and a real estate rationality plan will be undertaken that will include subletting space at its corporate headquarters and eliminating offices and facilities in smaller geographic areas. and low performance.
In addition, the company announces that it is stopping all work on innovations not related to soil care, such as air purification, the robotic lawnmower and education.
The boss resigns
Colin Angle, one of the co-founders, has resigned as CEO and chairman of the company's board of directors and will not stand for re-election as a director when his term expires at the next shareholders meeting in 2024. He has signed a contract to work as an advisor for a period of up to 12 months during which he will continue to receive an annual base salary of $850,000 and receive his outstanding stock awards.
The board has named Vice Chairman and Chief Legal Officer Glen D. Weinstein, 53, as interim CEO.
iRobot was founded in 1990 by three members of the artificial intelligence laboratory at the Massachusetts Institute of Technology who were experts in robotics.
In its more than 30 years of history it has manufactured robots to explore space or tour the Great Pyramid of Giza, but its great success has been a less glamorous device, the Roomba vacuum cleaner, launched in 2002 and which immediately became the robot most successful domestic.
It has marketed several generations of it and some of the most sophisticated models far exceed $1,000 in price.
“When I founded iRobot more than three decades ago, having more than 50 million of our products in homes around the world was beyond my imagination,” Angle said in the statement announcing his resignation.
“I am incredibly proud of what our team has accomplished over the years.
From the development of the first Roomba in 2002 to our latest generation, they have been relentless in building and delivering iconic new ways for consumers to clean and live.
At the same time, I know there is much work left to do to chart iRobot's next chapter.
Given the nature of the challenges facing the company, the board and I have mutually decided that iRobot will be best served by a new leader with experience in restructuring,” he added.
The iRobot products completed Amazon's offering for the home, which revolves around Alexa and has speakers, screens, tablets, doorbells, thermostats, security and health devices and a home robot, Astro, with surveillance functions and entertainment, among others.
The companies have signed a termination agreement that resolves all outstanding issues from the transaction, including Amazon's payment to iRobot of the previously agreed-upon $94 million breakup fee.
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