AMAZON & ZAPPOS MERGER
2009
Ninad Kadwe
16013
AMAZON:
Amazon.com is a customer-centric company for three kinds of customers: consumers, sellers
and enterprises. The Company serves consumers through its retail websites, and focus on
selection, price, and convenience. It also provides easy-to-use functionality, fulfillment and
customer service. Amazon is the largest online retailer in the nation, with revenues exceeding
$45 billion annually.
Amazon.com Inc, is an American multinational technology company based in Seattle that
focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is
considered one of the Big Four tech companies, along with Google, Apple, and Facebook.
Amazon is known for its disruption of well-established industries through technological
innovation and mass scale. It is the world's largest online marketplace, AI assistant provider,
and cloud computing platform as measured by revenue and market capitalization. Amazon is
the largest Internet company by revenue in the world. It is the second largest private employer
in the United States and one of the world's most valuable companies.
Amazon distributes downloads and streaming of video, music, and audiobooks through its
Amazon Prime Video, Amazon Music, and Audible subsidiaries. Amazon also has a publishing
arm, Amazon Publishing, a film and television studio, Amazon Studios, and a cloud computing
subsidiary, Amazon Web Services. It produces consumer electronics including Kindle e-readers,
Fire tablets, Fire TV, and Echo devices. In addition, Amazon acquisitions include Ring, Twitch,
Whole Foods Market, and IMDb. Among various controversies, the company has been criticized
for technological surveillance overreach, a hyper-competitive and demanding work culture, tax
avoidance and anti-competitive practices.
ZAPPOS:
Established in 1999, Zappos.com has quickly become a leader in online apparel and footwear
sales by striving to provide shoppers with the best possible service and selection. Zappos.com
currently stocks millions of products from over 1000 clothing and shoe brands. Zappos.com was
recognized in 2009 by FORTUNE MAGAZINE as one of the "100 BEST COMPANIES TO WORK
FOR", debuting as the highest-ranking newcomer to FORTUNE's 2009 list
Zappos.com was the #1 online seller of shoes at the time of the deal, stressing customer
service. It stocks 3 million pairs of shoes, handbags, apparel and accessories, specializing in
some 1,000 brands that are difficult to find in mainstream shopping malls. Through its website
(and 7,000 affiliate partners), Zappos.com distributes stylish and moderately priced footwear to
frustrated and shop-worn customers nationwide. In 2008, one year prior to the deal, Zappos
reported annual revenues exceeding $630 million.
REASON BEHIND THE MERGER:
Amazon acquired Zappos for 850million Dollars.
Amazon being already a master of Online product distribution by promptly taking orders and
shipping the goods cheaper
Amazon saw great opportunities for both companies to learn from each other and create even
better experiences for our customers.
Following the acquisition, the Zappos management team will remain intact and Zappos will
operate its successful brand, customer experience and unique culture of service independently
with headquarters in Las Vegas, NV.
the relationship between Zappos and Amazon was “governed by a document that formally
recognizes the uniqueness of Zappos’s culture and Amazon’s duty to protect it. We think of
Amazon as a giant consulting company that we can hire if we want—for instance, if we need
help redesigning our warehouse systems.”
“We are joining forces with Amazon because there is a huge opportunity to utilize each other’s
strengths and move even faster towards our vision of delivering happiness to customers,
employees and vendors,” said Tony Hsieh, CEO of Zappos. “We will continue to build the
Zappos brand and culture in our own unique way, and we believe Amazon is the best partner to
help us do this over the long term.”
Opinion of Zappos’ Financial Advisor
Zappos retained Morgan Stanley to provide financial advisory services and a financial opinion to
the Zappos Board in connection with a potential sale of Zappos. The Zappos Board selected
Morgan Stanley to act as its exclusive financial advisor based on Morgan Stanley’s
qualifications, expertise, reputation and knowledge of Zappos’ business and affairs. At the
meeting of the Zappos Board on July 20, 2009, Morgan Stanley reviewed a draft of its
preliminary financial analysis of the transaction and discussed the analysis with the Zappos
Board. At the meeting, Morgan Stanley informed the Zappos Board that, subject to completion
of due diligence by Zappos and absent any material changes to the terms of the transaction,
Morgan Stanley expected to be able to deliver its opinion upon the request of the Zappos Board
that, as of the date of such opinion, and based upon and subject to the assumptions,
qualifications and limitations set forth in a written opinion letter, the consideration to be
received by the holders of shares of Zappos stock pursuant to the Merger Agreement was fair
from a financial point of view to such holders, taken as a whole. On July 22, 2009, at the
request of Mr. Lin, in his capacity as Chairman of the Zappos Board, Morgan Stanley delivered
such opinion orally, and the opinion was subsequently confirmed by delivery of its written
opinion to the Zappos Board as of July 22, 2009.
The full text of Morgan Stanley’s written opinion, dated July 22, 2009, is attached as Appendix C
to this consent solicitation/prospectus. The opinion sets forth, among other things, the
assumptions made, procedures followed, matters considered and qualifications and limitations
on the scope of review undertaken by Morgan Stanley in rendering its opinion. We encourage
you to read the entire opinion carefully. Morgan Stanley’s opinion is directed to the Zappos
Board and addresses only the fairness from a financial point of view of the consideration to be
received by holders of Zappos stock, taken as a whole, pursuant to the Merger Agreement as of
the date of the opinion. Morgan Stanley’s opinion does not address any other aspect of the
Merger and does not constitute a recommendation to any shareholder of Zappos as to how
such shareholder should vote or act on any matter with respect to the Merger. In addition, the
opinion does not in any matter address the prices at which Amazon common stock will trade
following the announcement or consummation of the Merger. The summary of Morgan
Stanley’s opinion set forth in this consent solicitation/prospectus is qualified in its entirety by
reference to the full text of the opinion.
In connection with rendering its opinion, Morgan Stanley, among other things
reviewed certain internal financial statements and other financial and operating data
concerning Zappos;
reviewed certain financial projections for Zappos prepared by the management of Zappos;
reviewed certain publicly available financial statements and other business and financial
information of Amazon, and certain publicly available financial projections for Amazon
prepared by research analysts;
discussed the past and current operations and financial condition and the prospects of Zappos,
including information relating to certain strategic, financial and operational benefits anticipated
from the Merger, with senior executives of Zappos;
discussed the past and current operations and financial condition and the prospects of Amazon,
with senior executives of Amazon;
reviewed the reported prices and trading activity for Amazon common stock;
compared the financial performance of Zappos and Amazon and the prices and trading activity
of Amazon common stock with that of certain other publicly-traded companies comparable to
Zappos and Amazon, respectively;
reviewed the financial terms, to the extent publicly available, of certain comparable acquisition
transactions;
participated in discussions and negotiations among representatives of Zappos and
Amazon and their financial and legal advisors;
