Summary
Amazon.com, Inc. has announced its intention to acquire Zappos.com, Inc. through a merger agreement entered into on July 22, 2009. The acquisition will be structured as a merger of a wholly owned Amazon subsidiary with Zappos, making Zappos a subsidiary of Amazon. The total merger consideration is approximately $838 million, adjusted for Zappos' net debt and other factors, and will be paid primarily in Amazon common stock, valued at an average of $81.09 per share based on recent trading activity. This move signals Amazon's strategic expansion, likely aiming to bolster its online retail presence in the footwear and apparel sector.
Key Highlights
- 1Amazon.com, Inc. enters into a Merger Agreement to acquire Zappos.com, Inc.
- 2The acquisition is valued at approximately $838 million, adjusted for net debt and other terms.
- 3Payment for Zappos will be made primarily in Amazon common stock, with an estimated issuance of 10 million shares.
- 4Zappos employees will receive $40 million in cash and restricted stock units for retention.
- 5A portion of the Amazon shares will be held in escrow for indemnification claims for up to four years.
- 6The transaction is subject to Zappos shareholder approval, antitrust clearance (Hart-Scott-Rodino), and other customary closing conditions.
- 7The merger is expected to close in Fall 2009 and is intended to be a tax-free reorganization.
Frequently Asked Questions
The primary financial impact is the issuance of approximately 10 million shares of Amazon common stock, valued at roughly $838 million (subject to adjustments), to Zappos equity holders. Additionally, Amazon will incur costs for Zappos employee retention and potential escrowed shares for indemnification.
The acquisition price is calculated as $838 million minus Zappos' net debt as of March 31, 2009, plus or minus adjustments for stock options/warrants and transaction expenses. The consideration is paid in Amazon stock, with the number of shares based on an average stock price of $81.09.
Key conditions include approval from Zappos shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and other standard closing conditions. The merger is anticipated to close by the end of 2009.
While not explicitly detailed in this filing, the acquisition of Zappos, a prominent online shoe and apparel retailer, strongly suggests Amazon's strategic intent to expand its market share and product offerings in the fashion and footwear e-commerce space. It likely aims to leverage Zappos' brand, customer base, and operational expertise.