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Deal is valued at $928 million

The world of online retailers is booming with websites like Amazon.com and eBay doing well despite the weakened economy. Amazon is particularly popular with consumers thanks to low prices and fast shipping.

The online retailer today, however, announced that it is buying online shoe seller Zappos.com for a deal valued at about $928 million. Amazon is purchasing Zappos in an all-stock transaction reports Reuters.

The purchase will get Amazon into the shoes and apparel business in a big way and signals what many have known for a while. Amazon's own endless.com shoe site has been unable to generate the sales needed to compete directly with Zappos. Analyst Jeffrey Lindsay called the deal an "outstanding acquisition."

Forrester Research analyst Sucharita Mulpuru said, "This is, in some ways, Amazon throwing in the towel on footwear because they've tried to compete with Zappos."

Zappos is most known for its fantastic customer service and its policy of offering free shipping on all shoes and free shipping on returns if customers don’t like the shoes.

Zappos CEO tony Hsieh said, "A big part of the reason why Amazon is interested in us is because they recognize the value of our culture, our people, and our brand. Their desire is for us to continue to grow and develop our culture (and perhaps even a little bit of our culture may rub off on them)."

Reuters cites an anonymous source as saying that Zappos earned $40 million before interest, tax, and amortization in 2008. Amazon will acquire all outstanding shares of Zappos and assume outstanding options and warrants. Zappos gets about 10 million shares of Amazon common stock in the deal. At a current closing price of $88.79 per share, the deal is worth about $927.9 million today.

Amazon says that the Zappos management team will remain intact and Zappos will continue to operate under its own brand and as a separate entity.



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Zappos is awesome
By sthaznpride17 on 7/23/2009 11:47:57 AM , Rating: 2
I ordered a pair of Asics Tiger's from Zappos, got half a size too big so sent them back, free shipping both ways. They upgraded the shipping for the new pairs for free, came in two days after I placed the order. Customer service is awesome, and I hope it remains the same after the acquisition, as I plan to order shoes from Zappos in the future.




RE: Zappos is awesome
By imaheadcase on 7/23/2009 12:22:33 PM , Rating: 2
I concur, got shoes for work from them. Easy to use.


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