I am scratching my head over Amazon’s (AMZN) announced acquisition of robotics (read: automated logistics) manufacturer, Kiva. For $775 million!!!
What strikes me initially is the comparison with two other recent news items: UPS’s (UPS) acquisition of TNT (TNTE.AS) and Apple’s (AAPL) decision to apply a fistful of its cash to dividends and stock repurchases. UPS is using its cash to expand horizontally, expanding its known capabilities into broader markets. Apple is admitting that it can’t possibly put all of its cash to good use and so is returning some of it to its owners, the shareholders.
Amazon is spending close to a billion dollars on a technology that it knows largely as a user (and a recent one at that). The Merger Verger is skeptical.
That view is running counter to Wall Street’s. Amazon’s stock remains up about 5% from the announcement (against a generally flat market since then), resulting in an increase in market cap of nearly $4 billion. Holy shirt! That’s five times the purchase price.
From an integration perspective (strategic intent, vertical versus horizontal expansion, management know-how and probably due diligence as well) there is a lot to talk about here. More to come.