Amazon Acquisition of Zappos Essay

5115 Words May 10th, 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 Tactics 21 Implementation 23 Risk 25 Conclusion 26 References
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Amazon has separate retail websites for the different countries it operates within such as the United States, United Kingdom, France, Germany, Italy, Spain, Australia and Brazil with international shipping offered to certain additional countries it does not have formal operations within.
Amazon is a customer-centric company for three kinds of customers: consumers, sellers and enterprises. Amazon is a Fortune 500 company, traded on the NASDAQ stock exchange since 15th May 1997.

Amazon’s Previous Acquisitions
Prior to the acquisition of Zappos, Amazon had previously acquired numerous additional companies as shown in the diagram below. (Amazon, 2014)
Amazon has purchased numerous companies prior to Zappos allowing for expansion into new markets with horizontal acquisitions to accommodate its organic growth. The purchase of ‘Bookpages.co.uk’ was an example of another horizontal acquisition for Amazon becoming their ‘Amazon UK’ business.

Zappos Overview
(Zappos, 2014) Zappos is an online shoe and clothing shop founded in 1999 by Nick Swinmurn, based in Las Vegas, Nevada, United States (About.zappos.com, 2014). Shortly after Zappos founding, current CEO, Tony Hsieh joined as co-CEO. Zappos’ primary retail segment is shoes (accounting for 80% of all sales), but eventually expanded their inventory in 2007 to include clothing, handbags, eyewear, watches and

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