Massive layoffs at iRobot as European doubts kill Amazon deal
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Amazon has terminated its deal to buy iRobot after nearly 18 months and an investigation by the European Commission.
Amazon said its proposed acquisition of iRobot has no path to regulatory approval in the European Union, and the iRobot CEO has also stepped down as the company plans to axe 350 jobs, a third of its staff.
The deal was originally signed on August 4, 2022, under which Amazon would have acquired iRobot for $1.7bn in cash.
The companies today signed a termination agreement that resolves all outstanding matters from the transaction, including Amazon paying iRobot the previously agreed $94m termination fee.
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Better known for its robot vacuum cleaners, the company also built industrial robotic systems. “iRobot built the first micro rovers and changed space exploration forever. [It] built the first practical robots that left the research lab and went on combat missions to defuse bombs, saving thousand’s of lives,” said outgoing CEO and Chair Colin Angle. “iRobot’s robots crucially enabled the cold shutdown of the reactors at Fukushima, found the underwater pools of oil in the aftermath of the deep horizon oil rig disaster in the Gulf of Mexico.”
“We’re disappointed that Amazon’s acquisition could not proceed,” said David Zapolsky, Amazon SVP and General Counsel. “Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics. Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition—the very things that regulators say they’re trying to protect.”
“Today I step down as CEO of iRobot – a company I co-founded 33 years ago while still a graduate student at MIT,” said Angle as the company saw significant losses in 2023 that has led to the plans to lay off a third of its staff.
Glen Weinstein, iRobot’s Executive Vice President and Chief Legal Officer, has been appointed Interim CEO, and Andrew Miller, lead independent director of the Board, has been appointed Chairman of the Board after significant losses in 2023.
iRobot anticipates reporting full-year 2023 revenue of $891 million, a 25% reduction as compared to the same period last year and an operating loss of between $265 and $285 million.
The company is now looking to make $80-$100 million in savings by re-negotiating its joint design and contract manufacturing deals and reducing R&D expenses by approximately $20 million by sending non-core engineering functions to lower-cost regions. It is also centralizing global marketing activities to save $30m and closing smaller offices around the world. Turnaround executive Jeff Engel has been appointed Chief Restructuring Officer to oversee these cuts.
“We are disappointed with the Company’s 2023 performance – but our focus turns now to the future,” said Andrew Miller, the new Chairman of the Board.
“Along with the restructuring actions announced today, and with a refreshed turnaround-focused leadership team, we see a clear path to reinvigorating our outstanding brand, product performance and underlying technology. In addition to rightsizing our cost structure, innovation remains our most exciting growth opportunity,” he said.
“With a legacy of innovation and a foundation of creativity, the Board and I believe that iRobot can – and will – grow its presence and continue to build a cutting-edge suite of robotic floorcare solutions that help consumers make their homes easier to maintain and healthier places to live. “To do this successfully, however, we must rapidly align our operating model and cost structure to our future as a standalone company. Though decisions that impact our people are difficult, we must move forward with a more sustainable business model, and a renewed focus on profitability. We are confident that the actions we are announcing today will enable us to chart a new strategic path for sustainable value creation.”
“We look forward to reigniting growth of the brand with future launches of both new entry and premium floorcare solutions that will provide even smarter and more powerful ways for our customers to clean.”
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