The future of iRobot who have struggled up against a surging Ecovacs in the global robotic vacuum cleaning market, is today in question with analysts claiming the business is facing ‘liquidity issues” if Amazon is prevented from taking over the business.
Distributed in Australia and New Zealand by IXL Home the problems for the US Company started to unfold earlier this week when the European Commission in Brussels smashed hopes for a straightforward A$1.9 billion acquisition due to monopoly fears and the possible actions of Amazon if they got hold of the Company.
According to Bloomberg The outlook for iRobot without an Amazon deal is bleak with an informal poll of a half-dozen merger arbitrage specialists valuing the company at $5 to $12 a share on its own.
That suggests the market is assigning a roughly 55% to 65% chance of a deal getting done, according to Bloomberg calculations.
The stock was smashed when the EU news broke, and now trades around $35, more than 30% below Amazon’s $51.75-per-share offer Tuesday.
The indebted Roomba maker has seen revenue stall this year following a pandemic boom.
The stock has been on a downward trajectory since July, while Ecovacs has been on an upward trend with the Chinese manufacturer moving into several new global markets.
Bloomberg claims that while the European regulator’s warning is not a final decision and could be addressed with remedies proposed by the companies, some traders are concerned it raises the likelihood of the Federal Trade Commission challenging the deal in the US.
The US agency’s probe into the transaction since last year over competition concerns is the main risk.
Meanwhile, the FTC is pursuing a separate antitrust lawsuit against Amazon accusing the retailer of dominating the online marketplace.
The European Commission currently has a deadline of Feb. 14 to decide whether to approve the deal with concessions or to block it.
