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Amazon.com Goes Shoe Shopping, Tries On Zappos.com

ZapposComLogo.jpgAmazon.com gained a foothold in the footwear business with its purchase of online apparel and footwear seller Zappos.com, announced Wednesday.

Under terms of the deal, Amazon.com will acquire all outstanding shares and assume all outstanding options and warrants of Zappos.com in exchange for approximately 10 million shares of Amazon.com common stock, valued at approximately $807 million based on the stock’s average closing price for the 45 trading days ending July 17. Amazon.com will also provide Zappos.com employees with $40 million in cash and restricted stock units. The two companies said they expect the transaction to close during the fall.

The two parties added that Zappos.com’s management team will remain intact and it will continue to operate independently out of its Las Vegas headquarters.

Amazon.com founder and CEO Jeff Bezos on the deal:

Zappos is a customer-focused company. We see great opportunities for both companies to learn from each other and create even better experiences for our customers.

Zappos.com CEO Tony Hsieh added:

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. 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.

Bezos on Amazon.com and Zappos.com:

UPDATED at 5:45 p.m. ET to include Tony Hsieh’s letter to Zappos.com employees. UPDATED at 5:50 p.m. ET to add video.

Hsieh posted a letter to Zappos.com employees on the company’s blog. Highlights include:

Over the next few days, you will probably read headlines that say, “Amazon acquires Zappos” or “Zappos sells to Amazon.” While those headlines are technically correct, they don’t really properly convey the spirit of the transaction. (I personally would prefer the headline, “Zappos and Amazon sitting in a tree …”)

We plan to continue to run Zappos the way we have always run Zappos—continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.

They (Amazon.com) are not looking to have their folks come in and run Zappos unless we ask them to. That being said, they have a lot of experience and expertise in a lot of areas, so we’re very excited about the opportunities to tap into their knowledge, expertise and resources, especially on the technology side. This is about making the Zappos brand, culture and business even stronger than it is today.

Several months ago, they (Amazon.com) reached out to us and said they wanted to join forces with us so that we could accelerate the growth of our business, our brand and our culture. When they said they wanted us to continue to build the Zappos brand (as opposed to folding us into Amazon), we decided it was worth exploring what a partnership would look like.

Just like before, we plan to continue to grow our Las Vegas operations as long as we can continue to attract the right talent for each of our departments. We do not have any plans to move any departments, nor does Amazon want us to because they recognize that our culture is what makes the Zappos brand special.

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