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Amazon.com Inc is finalizing its acquisition deal with robotic car company Zoox. The acquisition that is projected to be worth $1 billion is Amazon’s debut into car manufacturing. AMZN stock is up.
Companies with good Merger and Acquisition (M&A )history particularly companies with the resources to acquire others may be seen by observers as market predators. The U.S Stock market is filled with numerous companies with large capital bases that smaller startups may not have to achieve their full potential. Thus, M&A activities are encouraged to keep the economy moving as underfunded startups may soon fade out. After weeks of speculations, Amazon.com Inc (NASDAQ: AMZN) is set to announce its acquisition of Zoox, American based automatic self-driving car producer.
The acquisition which is reported by The Information to be worth around $1 billion will see the e-commerce giant extend its roots into the self-driving car production/ service niche. This series of positive moves have geared investors as evident in the company’s stock performance which has gained 0.74% ($20.18) at the close of trading on Thursday. Today in teh pre-market, AMZN stock is 0.61% up, at $2,771.30. The market cap is $1.37 trillion.
Tracking Amazon’s Merger and Acquisition Trends
Amazon was founded by Jeff Bezos in Bellevue, Washington, on July 5, 1994. The company has a very rich M&A history dating back to its foundation. In 2000, U.S. toy retailer Toys “R” Us entered into a 10-year agreement with Amazon, valued at $50 million per year plus a cut of sales, under which Toys “R” Us would be the exclusive supplier of toys and baby products on the service, and the chain’s website would redirect to Amazon’s Toys & Games category.
In 2001, Amazon entered into a similar agreement with Borders Group, under which Amazon would comanage Borders.com as a co-branded service. Borders pulled out of the arrangement in 2007, with plans to also launch its own online store. On October 18, 2011, Amazon.com announced a partnership with DC Comics for the exclusive digital rights to many popular comics, including Superman, Batman, Green Lantern, The Sandman, and Watchmen. The partnership has caused well-known bookstores like Barnes & Noble to remove these titles from their shelves.
On the tech scene, Amazon reached an agreement with Apple Inc (NASDAQ: AAPL) in November 2018 to sell selected products through the service, via the company and selected Apple Authorized Resellers. As a result of this partnership, only Apple Authorized Resellers may sell Apple products on Amazon effective January 4, 2019. Amazon’s new acquisition target Zoox will usher the company into a new era where it can offer products and services to compete with Uber Technologies Inc (NYSE: UBER), Lyft Inc (NASDAQ: LYFT), and Taxify amongst others.
What Acquisition of Zoox by Amazon Will Bring?
In terms of financials, Amazon will be acquiring the company at an estimated $1 billion which is a huge shrink from the Zoox valuation $3.2 billion far back in July 2018. The sources note that Amazon could use the technology for autonomous deliveries, similar to its existing robot and drone delivery projects, while the Financial Times says that Amazon will use the acquisition to produce an autonomous ride-hailing fleet to compete with the likes of Alphabet’s Waymo.
Zoox currently operates with a staff strength of 1000 and Amazon.com Inc will undoubtedly be investing a lot more to get the company’s robotic vehicles to the market. Just as Twitch operates, The Financial Times opines that the acquisition clause of Zoox will favor the company to run as an independent subsidiary of Amazon.