paidContent - Amazon-Zappos Deal: The Really Detailed Details

This story was written by Rafat Ali.
I knew it would happen on a Friday evening; damn you AMZN. But oh well, the details are juicy enough. Amazon (NSDQ: AMZN) has come out with a filing detailing its acquisition of Zappos, announced earlier this week. Deal points (full document embedded after the jump):

Total merger consideration: $838 million, minus $52 million for Zappos.coms net debt as of March 31, 2009, plus the lesser of $35 million and the aggregate exercise price of all stock options and warrants outstanding and unexercised as of the closing of the merger, plus the aggregate exercise price of all stock options and warrants exercised between June 8, 2009 and the closing of the merger, minus the lesser of $15 million and Zappos.coms transaction expenses incurred in connection with the merger.

Paying by AMZN shares: The merger consideration will be paid in shares of Amazon.com common stock, except for payment of fractional shares in cash. The aggregate number of Amazon.com shares to be issued in connection with the merger…is equal to the total merger consideration divided by $81.09, which is the average of the closing prices of Amazon.com common stock for the 45 trading days ending July 17, 2009, and is about 10 million shares of common stock. In addition, Amazon.com will provide Zappos.com employees with $40 million in cash and restricted stock units for retention purposes.

Escrow amount: 10% of the total number of shares of Amazon.com common stock issuable to Zappos.com shareholders. On February 28, 2011, subject to any pending indemnification claims, sufficient shares will be released from escrow to reduce the escrowed amount to $40 million, which will remain in escrow and subject to certain categories of Amazon.com indemnification claims until the fourth anniversary of closing.

The shareholding structure of Zappos: (i) 21,469,674 shares of company common ctock, (ii) 1,490,500 shares of series A preferred stock, (iii) 4,514,499 shares of series B preferred stock, (iv) 10,295,572 shares of series C preferred stock (v) 427,633 shares of series D preferred stock, (vi) 3,246,753 shares of series E preferred stock and (vii) 3,772,223 shares of series F preferred stock

Liquidation preferences: 60 million shares of common stock, $0.001 par value and 35,99 million shares of preferred stock, $0.001 par value, of which (i) 1,550,000 shares have been designated series A preferred stock, with a liquidation preference of $0.10 upon consummation of the merger, (ii) 7,725,000 shares have been designated series B preferred Stock, with a liquidation preference of $0.1949 upon consummation of the merger, (iii) 17,300,000 shares have been designated series C preferred Stock, with a liquidation preference of $0.45273 upon consummation of the merger, (iv) 650,000 shares have been designated series D preferred stock, with a liquidation preference of $0.7910 upon consummation of the merger, (v) 5,000,000 shares have been designated series E preferred stock, with a liquidation preference of $24.64 upon consummation of the merger, (vi) 3,772,223 shares have been designated series F preferred stock, with a liquidation preference of $24.642 upon consummation of the merger.

—Investors list (via PEHub):First round: $6.2 million, came primarily from Venture Frogs, an investment vehicle controlled byZappos CEO Tony Hsieh. Sequoia Capital, Draper Richards and Millennium Technology Ventures are other investors in the company.

Zappos execs: Anthony Hsieh, Alfred Lin and Fred Mossler will remain employed in their current positions and no one has indicated that they intends to terminate their employment or relationship with the company.


Amazon Zappos Deal Details -

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By Rafat Ali