iRobot (NASDAQ: IRBT) stock is up 34% today premarket. The cause of this leap in IRBT stock is that there’s a rumour that the European Union will approve Amazon’s takeover of the company. This is, as yet, only talk and rumour, no one has any confirmation. But, given that the likely takeover price is very much higher than the current stock price there should be a reaction even to such a rumour.
As we all know iRobot makes Rhoomba. OK, and Amazon has been trying to buy it for some time - would make a nice addition to their varied lines of gadgetry. Then comes the intervention of the bureaucracies. A company like Amazon can do hardly anything these days without getting the sign off from multiple and overlapping regulatory bodies.
But, as the talk goes, everyone’s going to be onside with this: “Amazon (NASDAQ:AMZN) is expected to be granted unconditional EU approval for its planned purchase of robot vacuum maker iRobot, according to a Reuters report, which cited people familiar with the matter.
The European Commission, which has a deadline of Feb. 14 to decide on the deal, declined to comment to Reuters. Amazon (AMZN) didn't immediately respond to request for comment. The European antitrust regulator announced in July that it opened an in-depth review into Amazon's (AMZN) purchase of the robot vacuum cleaner. The UK's antitrust regulator approved the transaction in June.”
iRobot Corporation stock price from Google Finance
Now, how much weight to put on this, well. It is true that the take out price is substantially above the current stock price - $50 and change, an enterprise value some 50% above this morning’s starting market capitalisation. And the rumour is coming from Reuters: “BRUSSELS, Nov 23 (Reuters) - Amazon (AMZN.O) is set to win unconditional EU antitrust approval for its $1.4 billion acquisition of robot vacuum maker iRobot (IRBT.O), three people familiar with the matter said on Thursday.” Maybe it really will happen - at which point obviously iRobot is worth the bid amount not the current stock price. In between here and then it’s all about the probability that it will happen.
