U.K. Regulator Gives Amazon’s iRobot Acquisition the Go-Ahead — Decides Takeover Won’t Vacuum up the Competition
Key takeaways
- The U.K. regulatory body, the Competition and Markets Authority, gave the go-ahead for Amazon’s $1.7 billion acquisition of iRobot late last week
- iRobot’s share price was up 21% at the news, but Amazon closed down 1%
- The deal still faces hurdles and U.S. and European regulators are yet to decide on the purchase
Will Big Tech ever be able to buy a company again without plenty of regulatory scrutiny? Probably not, as three different regulatory bodies are involved in Amazon’s proposed takeover of smart vacuum company iRobot. The U.K. has been the first to stick its neck above the parapet and greenlight the deal — here’s the latest.
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What’s happened with Amazon’s iRobot deal?
In a bid to strengthen its position in the smart home market, Amazon decided smart vacuum company iRobot would be a nice addition to its suite of products, including Amazon Alexa, Ring doorbell and more.
The $1.7 billion acquisition was first announced last summer, immediately catching the attention of several regulators who were wary that the purchase could decrease competition in the sector. The Federal Trade Commission (FTC) was the first to object and the EU opened up an investigation last month.
But now, after two months of looking into the matter, the U.K’s Competition and Markets Authority (CMA) has been the first to give the deal the greenlight after saying it would not cause a “substantial lessening of competition” in the country.
An Amazon spokesperson said “We’re pleased with the UK Competition and Markets Authority’s decision and are committed to supporting regulatory bodies in their work. We look forward to similar decisions from other regulators soon”.
The market reaction
iRobot’s share price surged 21% at the news, hitting highs of $51.50 on Friday. Amazon shares closed 1% down, but the stock has fluctuated recently in line with market headwinds.
Amazon isn’t out of the clear yet — the deal is yet to be approved by the FTC and the EU’s antitrust regulator — but it’s a positive step forward nonetheless, especially after the CMA made a name for itself after blocking the Microsoft acquisition of Activision Blizzard last month.
While the CMA said their decision was because there was significant competition in the market already for iRobot and there was no clear benefit for Amazon to promote the iRobot brand over others on its online store, other regulators may not be so lenient.
The bottom line
Amazon will undoubtedly be pleased at the win as Big Tech faces increasing scrutiny for every merger and acquisition they make. At this point iRobot’s share price is pretty much entirely tied to whether the deal goes ahead or not, so investors will be watching closely for any dissent from the regulatory ranks.
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