Amazon to Buy Up Zappos

E-commerce heavyweight Amazon is set to acquire shoe e-retailer Zappos in a deal worth a cool $850 million. Under the agreement, the former company will obtain all outstanding shares, options and warrants of the latter in exchange for approximately 10 million shares of Amazon common stock along with $40 mil in cash and restricted stocks for Zappos employees.

In a statement, Zappos CEO Tony Hsieh said the deal went through 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.” (Hsieh also sent a lengthy explanation of the deal in his letter to employees). After the ink dries, the Zappos staff will continue as an independent unit out of Vegas but with expanded distribution opportunities and customer service capabilities.

While the whole arrangement seems peachy on the surface, ZDNet says the one downside is the purchase price itself, which the publication claims is less than 1x the revenue of the growing Zappos.

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