iRobot whose products are distributed by Melbourne based Company IXL Home could be facing serious problems apart from competition stripping market share away from the US robotic vacuum cleaning Company.
Amazon’s takeover of the Company is set to be blocked by the European Union’s competition watchdog and this spells problems for the Company who were cash strapped before the deal with Amazon was announced.
Amazon agreed to buy iRobot in August 2022 to beef up its portfolio of smart devices such as the Alexa voice assistant, smart thermostats, security devices and wall-mounted smart displays.
The potential blocking of the deal is now a major problem for the Company whose share value has slumped as negotiations progressed with various authorities’ analysts said.
Shares in the Company fell 45% when news of the EU block was revealed.
During the past six months the stock has fallen over 55%.
Amazon was previously given the all-clear for the purchase by the UK government’s competition watchdog.
The Competition and Markets Authority (CMA) found that its place in the UK market was “modest” and that it already faced several significant rivals.
Amazon announced the deal to buy iRobot in August 2022 in a takeover deal set to cost A$2.58 billion.
It was looking to expand its footprint in the market for smart home appliances.
But regulators are worried that iRobot’s tie-up with Amazon could make it difficult for other vacuum-makers to compete, especially if Amazon were to give the Roomba benefits over rivals on its e-commerce site.
In Australia iRobot is facing tough competition from the likes of Ecovacs, Samsung and LG in the robotic vacuum market.
The European Commission (EC) started their investigation into the purchase last July.
The takeover by Amazon had been seen as a boon for the firm, as it has struggled with sales declines.
“If the objective is to have more competition in the home robotics sector, this makes no sense,” said Matt Schruers, president of tech lobbying group Computer and Communications Industry Association.
“Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug,” Schruers told Reuters.
