IRBT Stock Alert: The $1.7 Billion Reason iRobot Is Up Today

Source: Grzegorz Czapski /

Consumer robotics firm iRobot (NASDAQ:IRBT) — which specializes in autonomous home vacuum cleaners — enjoyed resurgent sentiment from a surprise announcement. Specifically, the U.K.’s Competition and Markets Authority (CMA) gave a nod of approval to Amazon (NASDAQ:AMZN) and its $1.7 billion acquisition proposal for iRobot. In turn, IRBT stock jumped about 20% in early Friday afternoon trading.

Notably, the British regulatory agency concluded that the deal would not lead to competition concerns in the U.K. All the more surprising, the CMA previously turned down a bid by Microsoft (NASDAQ:MSFT) to buy video-gaming giant Activision Blizzard (NASDAQ:ATVI), according to The Wall Street Journal. For its part, shareholders of IRBT stock had largely given up on the deal, which was announced in August last year.

“We’re pleased with the UK Competition and Markets Authority’s decision and are committed to supporting regulatory bodies in their work,” an Amazon spokesperson remarked following the announcement. “We look forward to similar decisions from other regulators soon.”

Looking ahead, European Union regulators will decide by July 6 whether to greenlight the deal. Back home, the U.S. Federal Trade Commission (FTC) will also examine the iRobot deal. Per Reuters, experts anticipate that the FTC will file an antitrust lawsuit against Amazon.

IRBT Stock Soars on a Critical Lifeline

Despite some obstacles ahead, IRBT stock skyrocketed as the underlying enterprise is now back in the game. As another WSJ article pointed out, prior to today’s announcement, iRobot shed the entire deal premium due to rising regulatory scrutiny. Most stakeholders gave up hope of anything materializing. Now, a realistic chance for broader approval exists.

True, the FTC remains a thorny issue. As the WSJ mentioned, FTC Chair Lina Khan made reigning in Amazon a top priority. In addition, news reports from earlier this year suggested that the agency could oppose the iRobot deal.

If that wasn’t enough, when Amazon closed a prior deal — a $3.5 billion takeover of primary care provider One Medical in February — the FTC sent a warning letter to the e-commerce stalwart, according to Reuters. The document cited specific concerns about the deal, but the regulatory arm took no future steps.

Nevertheless, the FTC incurred a full plate attempting to win an injunction to stop Microsoft’s Activision Blizzard bid. Hearings related to that matter will likely start in a San Francisco federal court next week. Therefore, the iRobot deal might slip under the radar. If so, that might be a positive for IRBT stock.

Why It Matters

Fundamentally, the news about the U.K. regulatory approval couldn’t come soon enough. Presently, only one analyst within the past three months covers IRBT stock with a pensive “hold” rating. Going back to the trailing year, a total of six analysts covered IRBT, with not a single expert pegging it a “buy.”

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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