Amazon's Acquisition of Self-driving Car Startup Zoox
| Case Code: BSTR622 Case Length: 12 Pages Period: 2015-2020 Pub Date: 2021 Teaching Note: Available |
Price: Rs.250 Organization: Amazon, Inc. Industry: e-commerce Countries: United States Themes: M&A, Diversification Strategy, |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
A Note on Zoox
Zoox was established in July 2014 by Tim Kentley-Klay (TKK), and Jesse Levinson (Levinson). As an AI robotics-based company in the mobility space, its vision was to develop fully autonomous robotic, zero-emission vehicles that could take on-demand point-to-point mobility in cities to the next level (Refer to Exhibit IV for details about Zoox’s vehicle). Onthe vision of the company, TKK said, “We want to transform our cities in the way that we live, breathe, and work with our families and communities that’s really profound.” ..
About the Deal
In May 2020, WSJ reported that Amazon was in talks to acquire Zoox for less than US$3.2 billion, the valuation Zoox had achieved in 2018. Later, on June 26, 2020, Amazon announced that it had signed a definitive merger agreement to acquire Zoox fora US$1.3 billion cash deal. Amazon planned to run Zoox as an independent entity. As per the deal document, Amazon had the option of issuing a US$30 million bridge loan to Zoox until the deal was closed as Zoox was running out of cash..
Challenges Ahead – Zoox Sued Over The Deal
The deal price was less than one-third of Zoox’s US$3.2 billion valuation in July 2018. Many employees of Zoox with stock options were shocked when they heard the deal price, which was fixed after a steep discount in the valuation the company got in 2018. They stated that insiders (executives, board members, management, and investors holding preferred shares)had used the COVID-19 pandemic crisis to justify the low proceeds from sale despite discussions on the sale of Zoox having started much before the pandemic...
Exhibits
Exhibit I: Timeline of Amazon
Exhibit II:
Shipping Costs of Amazon 2011-2019 (in US$ Billion)
Exhibit III:
Selected Financial Information of Amazon
Exhibit IV:
A Note of Zoox Robo Vehicle
Exhibit V:
Zoox’s Self-Driving Vehicle
Exhibit VI:
Zoox’s Testing Self-Driving Technology on Road
Exhibit VII:
Zoox’s Funding Details Until October 2019
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