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Why is Irobot Corp (IRBT) Stock down?
Irobot Corp (IRBT) stock dropped by 26.93% due to the news concerning European antitrust regulators' intention to block Amazon.com's (AMZN) proposed acquisition of iRobot, the manufacturer of the Roomba vacuum cleaner.
- European Antitrust Regulators' Decision: The Wall Street Journal reported that the European Union's competition watchdog aims to prevent Amazon's $1.7 billion bid to acquire iRobot. Competition officials from the European Commission, the executive body of the European Union, have rejected the proposed acquisition and are in the process of submitting their recommendation for formal approval from the commission's top 27 political leaders. It is unlikely that the commission will overrule this recommendation, as per the Journal's report. The European Commission has set a final decision deadline of February 14.
- Antitrust Concerns in the Robot Vacuum Cleaner Market: European regulators have voiced concerns that Amazon's acquisition of iRobot would lead to reduced competition within the robot vacuum cleaner market. This concern over potential market monopolization has contributed to the rejection of the acquisition.
- iRobot Stock Reaction: iRobot's stock reacted sharply to this news, experiencing a significant decline of 26.9%. The stock closed at $17.26, reflecting the impact of the European antitrust concerns on investor sentiment.
- Amazon's Acquisition Plans: Amazon initially announced its intent to acquire iRobot in August 2022 for $61 per share in an all-cash transaction. However, the terms of the deal were adjusted in July 2023, with Amazon agreeing to pay $51.75 per share in cash for the acquisition. In summary, iRobot's stock experienced a significant decline due to European antitrust regulators' rejection of Amazon's planned acquisition, citing concerns about competition within the robot vacuum cleaner market. This development has cast uncertainty over the future of the acquisition and its impact on both companies.
Irobot Corp (IRBT) stock dropped by 19.77% due to the news that Amazon.com (AMZN) will not make concessions to European Union (E.U.) antitrust regulators in its bid to acquire the home robotics specialist. This refusal by Amazon, along with concerns raised by the European Commission (EC) about potential competition restrictions in the robotic vacuum cleaner (RVC) market, led to the sharp decline in iRobot's stock as investors reacted to the increased uncertainty surrounding the acquisition.
- Amazon's Stand: Amazon is reportedly choosing not to offer concessions to the European Commission (EC) to clear its impending acquisition of iRobot, despite the EC's concerns that the deal could limit competition in the robotic vacuum cleaner (RVC) market.
- Upcoming Decision: The EC has set a deadline of February 14, 2024, to approve or deny the acquisition. Amazon's refusal to propose changes in its European operations increases the risk of regulatory rejection, but it may also indicate confidence that the deal will proceed unconditionally.
- Potential Investment Opportunity: With iRobot stock currently trading at a more than 40% discount to the agreed acquisition price, this situation could present a speculative merger arbitrage opportunity for investors betting on the deal's approval.
iRobot Corp Stock (IRBT) dropped by 17.19% from $41.48 to $34.35 in the trading on Monday November 27, 2023. The reason why IRBT stock down today is due to the EU warning about $1.4B sale to Amazon. The European Union’s antitrust watchdog issued a warning that Amazon’s planned $1.7 billion acquisition of the Roomba maker raises competition concerns. Additionally, the commission said it found that Amazon may have the ability to prevent or degrade iRobot rivals’ access to its online site by delisting or reducing the visibility of their products in search results.
IRBT's stock fell 13.73% after Amazon reduced the takeover price by 15% for debt adjustments. The target has taken out a new $200 million financing facility to fund operations. Amazon in turn cut its offer price to account for the additional debt.
https://www.fool.com/investing/2023/07/25/why-irobot-stock-fell-today/
Shares of iRobot (IRBT) had fallen by 8.32% in Thursday trading, after Reutuers reported that the European Unions has launched a "full-scale" antitrust investigation of Amazon's plan to acquire the maker of Roomba vacuum-cleaning robots. Investors were presumably caught off guard by the announcement, which came just a week after the United Kingdom's Competition and Markets Authority gave its assent to the deal. Now that with the European Commission taking the opposite course,iRobot investors have months of new uncertainty to look forward to. The iRobot investors would stand to make a 34% profit from this deal or they could lose everything they've gained over the past year.
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