UPDATE: Amazon To Acquire Online Company Zappos For $847 Million
23 Juillet 2009 - 1:23AM
Dow Jones News
Amazon.com Inc. (AMZN) agreed to buy online apparel-and-footwear
seller Zappos.com Inc. for roughly $850 million in stock and cash,
a deal that adds more products and inventory to the world's biggest
e-tailer.
Amazon will pay $807 million in Amazon stock to purchase all of
Las Vegas-based Zappos. It will also give Zappos employees an
additional $40 million in cash and shares.
The deal would be the most expensive purchase in Amazon's recent
history, according to FactSet Research. Amazon's priciest
acquisition this decade was Audible Inc. - which provided audio
editions of books and newspapers - for $280.7 million cash in early
2008, according to FactSet.
Purchasing Zappos marks yet another stage in Amazon's growth
through both acquisitions and organic development. Founded as an
online bookstore, the Seattle-based company has expanded into a
host of retail categories, including electronics, toys and music.
The company has also developed the Kindle series of book readers,
that buyers can use to download electronic versions of books from
Amazon.
Analysts praised the deal, saying it would be mutually
beneficial.
"These are two recognized dot-com companies getting together,
which only enhances each other's growth potential," Fred Moran, an
analyst at Benchmark Capital said. He called it "small but
wise."
Zappos doesn't disclose financial details, but the company
reportedly recorded $1 billion in gross sales last year.
Chief Executive Tony Hsieh vowed in an email to employees that
"we plan to continue to run Zappos the way we have always run
Zappos."
Hsieh also said Amazon reached out to Zappos several months ago.
A key factor was Amazon's intent to let Zappos continue to build
the Zappos brand "as opposed to folding us into Amazon."
The acquisition is one of a series of recent Amazon investments,
including the acquisition of visual-product-search company SnapTell
Inc. for an undisclosed amount last month. Speculation has also
mounted that it's interested in buying online DVD rental service
Netflix Inc. (NFLX). A Netflix spokesman declined to comment.
The Zappos management team will remain intact, and the company
will operate its brand as a wholly owned subsidiary. The deal is
expected to close this fall.
Amazon shares were up 1.3% to $89.90 in after-hours trades.
-By Ben Charny, Dow Jones Newswires; 415-765-8230;
ben.charny@dowjones.com
-By Lauren Pollock, Dow Jones Newswires; 212-416-2356;
lauren.pollock@dowjones.com
(Scott Morrison and George Stahl contributed to this
report.)