Amazon has announced its acquisition of Zappos for $847MM. I have to say I am surprised Zappos never made a public offering debut. The Company has such great brand loyalty due to its fantastic customer service and really seemed to be gaining meaningful marketshare. Friends and acquaintances opted to buy through Zappos over other outlets due to its quick turnaround time and willingness to refund unwanted / flawed items. It would seem that the smart guys at Sequoia Capital opted for a bird in the hand versus two in the bush. Given the current market conditions, you can't really fault them for that although I am surprised that they didn't negotiate for more cash as they are currently getting $807MM in stock. While Amazon's stock has been a rocketship as of late, these guys are definitely taking a risk that the stock will maintain its value or continue to climb. (Falls into the Apple bucket, great earnings but hard to invest now as the Company's stock has already risen to great heights). Given the volatility in today's market, I just think you need to demand cash.
Culturally this combination seems to make a lot of sense as both Jeff Bezos (CEO, Amazon) and Tony Hsieh (CEO, Zappos) / Alfred Lin (COO / CFO, Zappos) are smart, dynamic guys who decided to take on the traditional retailers (a formidable opponent) and offer effective customer service plus provide a forum for user-generated reviews. Ultimately, I think Bezos made the right call of knocking out a competitor via acquisition while holding on to his cash; nicely done!
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