Amazon Acquisition of Zappos

5104 Words Apr 29th, 2014 21 Pages
| Mergers & Acquisitions | Acquisition Case Study: Amazon’s acquisition of Zappos, November 2009 | | Stephen Greening | 26/04/2014 |

WORD COUNT: 2489
Contents
Executive Summary 3 Introduction 4 Amazon Overview 4 Amazon’s Previous Acquisitions 5 Zappos Overview 6 Acquisition of Zappos 9 Strategy 11 Why Amazon wanted to acquire Zappos 11 Regulation 14 Valuation 15 Comparable Company Analysis (Comps) 15 Discounted Cash Flow (DCF) Analysis 16 Precedent Transactions Analysis 16 Historical Stock Price & Next Twelve Months (NTM) Analysis 17 Financing 19 Defence
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Two investment banks were involved in the acquisition deal. Zappos appointed Morgan Stanley as its lead financial advisor to a possible sale or strategic relationship in April 2009. Amazon hired Lazard as their buy-side advisor for the deal in May 2009.
The acquisition of Zappos by Amazon was not subject to regulatory implications. No other companies attempted to acquire Zappos after the deal was announced, so no competitive bidding strategies were required to be employed.
The acquisition of Zappos by Amazon was deemed a success, Zappos and Amazon both benefited from the acquisition. Zappos remains an independent subsidiary of Amazon retaining its unique culture and brand. Amazon saw an instant increase in profits which was reported after the publication of their quarterly figures.

Introduction In November 2009, ‘Amazon, Inc.’ (Amazon) completed the acquisition of ‘Zappos.com, Inc.’ (Zappos) in a deal worth around $1.2 billion. The acquisition of Zappos by Amazon was a horizontal merger, with Amazon acquiring Zappos to offset its failed online shoe retail market entry Endless.com.
Amazon Overview
(Amazon, 2014)
Amazon is an American international electronic commerce (e-commerce) company founded in 1995 by Jeff Bezos, with its headquarters in Seattle, Washington, United States. Starting as an online bookstore, Amazon diversified into numerous…

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