The mergers and acquisitions activity typically slows down during an economic slowdown. Amazon (AMZN) proposed a buyout of iRobot (IRBT), giving iRobot a $91 million break-up fee if the deal falls through. Microsoft (MSFT) proposed to buy Activision (ATVI) a year ago. It will pay a $3 billion fee if the deal fails to close. However, closing delays out of their control could lead to a new deal.
Amazon and Microsoft announced the deals when markets were hot.
Activision and Microsoft
ATVI stock is trading nowhere close to the $95 offer. Markets are skeptical that the deal will close. Governments in the U.S., China, and the U.K. are scrutinizing the monopolistic risks. Sony (SONY) is complaining about the deal, despite its PlayStation competing effectively against Microsoft’s Xbox market share.
Amazon and iRobot
The European Union regulator initiated its probe into the planned takeover last week. Amazon has a strong case addressing the EU’s concerns about privacy. For example, Roomba has built-in restrictions. It has only basic sensor tracking, as Financial Times reported.
Patient investors should expect the deal to take time to close. The drop in IRBT stock suggests that markets do not believe it will happen.
M&A investors have a high reward with medium risk. Consider both IRBT and ATVI at these levels.
