Jefferies

Actionable Ideas for Companies and Sponsors

Numerous M&A Strategies Being Pursued in Response to Perceived Threat of Amazon

The breadth of Amazon’s online and offline presence has had a dramatic impact on the strategic response by companies across many segments of the retail industry to counter the perceived and actual competitive impact of Amazon’s powerful market position.

To date, strategic responses have fallen into three broad categories. First, some retailers have chosen the path to go private to avoid the pressure of quarterly earnings, as they take the steps to transform their businesses in response to Amazon’s impact. This includes Staples Inc., which announced its $6.6 billion go-private sale to Sycamore Partners in June 2017, and the Nordstrom family, which in September announced the selection of Leonard Green Partners as their partner in preparation for a formal offer to take the company private. Second, offline retailers have bolstered their online capabilities by acquiring successful online retailers. This includes Wal-Mart, which acquired both the online discount retailer Jet.com for $3.3 billion and Bonobos, the men’s online apparel company for $310 million, and PetSmart Inc, which acquired Chewy’s.com, the online pet food and products company for $3.4 billion. Finally, other companies have pursued more offensive M&A strategies. This includes Home Depot, which acquired BlackLocus, a retail data analytics and tools company, to drive innovation for nationwide retail solutions across online and offline sales.