Have you change your opinion after the latest report (January 19 , 2024) that EU plans to block Amazon acquisition? The IRBT stock dropped another 30% and now this deal a total bust or huge opportunity to cash ~77% premium if approved. Is there still a chance this get approved on February 14th deadline of EU in-depth investigation? Do you know what the rejection procedure for EU committee for this deal?

I liked this analysis and appreciate your willingness to put it out in the public square!

I just have an issue with the chances for the deal proceeding.

In your table of probabilities, what is 76.7% the probability of? From my math/stats knowledge, this is simply the average probability of approval for the three commissions. Some readers may take it to mean the probability of the deal getting approved by all three regulators however that is not true. We need each commission to approve and assuming they are acting independently, we can write the probability as 100%*70%*60%=42%. So it seems the odds are better than even that the deal gets turned down.

Yea it was just the weighted average probabilty of all three commissions saying yes. Analyzing actual deal probabilty can either be done looking at the spread of the new takeout price (which is actually below the price prior to announcement) or through options market.

Options market the only real way to mathematically look at it and depending on when you think it will close, the probability is torn. I'd say options give it a 30 - 40% chance of clearing

Hello Paul,

Have you change your opinion after the latest report (January 19 , 2024) that EU plans to block Amazon acquisition? The IRBT stock dropped another 30% and now this deal a total bust or huge opportunity to cash ~77% premium if approved. Is there still a chance this get approved on February 14th deadline of EU in-depth investigation? Do you know what the rejection procedure for EU committee for this deal?

Hi Kiril, I made a Twitter post here regarding the above if you want to check that out.

https://x.com/paulcerro/status/1749856422165156036?s=20

I liked this analysis and appreciate your willingness to put it out in the public square!

I just have an issue with the chances for the deal proceeding.

In your table of probabilities, what is 76.7% the probability of? From my math/stats knowledge, this is simply the average probability of approval for the three commissions. Some readers may take it to mean the probability of the deal getting approved by all three regulators however that is not true. We need each commission to approve and assuming they are acting independently, we can write the probability as 100%*70%*60%=42%. So it seems the odds are better than even that the deal gets turned down.

Yea it was just the weighted average probabilty of all three commissions saying yes. Analyzing actual deal probabilty can either be done looking at the spread of the new takeout price (which is actually below the price prior to announcement) or through options market.

Options market the only real way to mathematically look at it and depending on when you think it will close, the probability is torn. I'd say options give it a 30 - 40% chance of clearing