(Los Mirages, Calif. and Seattle WA) – April 1, 20111 – Smashwords, a leading ebook distributor, today announced a definitive agreement to acquire Amazon for $149.99 a share or $69 billion, a 20% discount off of yesterday’s closing list price.
The merger will create the world’s largest ebook publishing and distribution platform serving billions of authors, publishers and consumers worldwide.
The combined company, to be renamed Smashazon, will undergo a strategic product line rationalization.
Although Amazon has achieved minor success in the ebook market, the Smashwords management team believes it can lead Amazon to greater success by eliminating its distracting non-book operations.
“Amazon’s doing bang-up business in edible undergarments,” said Mark Coker, founder and CEO of the company formerly known as Smashwords. “Although we appreciate their focus on customer satisfaction, these products don’t fit with our palate or long term vision. We’d rather please the customer with words. The words of great stories light up our imaginations to create sights, sounds, smells and experiences more vivid than reality.“
The Smashwords management team is optimistic the former Amazon can leverage some of their non-book experience to sell more ebooks.
“Ebooks could taste and smell better,” said Jeffrey Bezos, former Amazon CEO who will assume the new position of Chief Satisfaction Officer at Smashazon. “We will fully service the needs of our customers.”
Following the acquisition, Smashazon will operate as a private company. The combined companies’ physical operations will be consolidated into the current Smashwords Smashoplex campus in Los Mirages, California.
Financing for the leveraged buyout was arranged by Smashwords Bank, N.A., a newly formed FDIC-insured banking institution that has arranged a $69 billion credit line facility. The massive credit line, which makes this the largest-ever leveraged buyout in world history, was enabled by a new US Federal Reserve zero –interest– rate economic stimulus program called “Regulated Overnight Treasury Facilitation Loan Maturity Acquisition Obligations,“ better known as ROTFLMAO.
At a press conference to announce the acquisition, Coker said he expects the new Smashazon will pay off the US taxpayer-funded loan within five years, based on his projection that ebooks will grow from 10 percent of the overall book market today to over 450 percent of the market within three to five years.
“Amazon generated over $3 billion dollars in cash flow in 2010, and Smashwords generated nearly that much,” added Coker with an air of understated modesty that led some market observers to infer Smashwords’ cash flow might actually exceed Amazon’s.
“This acquisition proves that Smashwords is bigger than Amazon, otherwise the acquisition wouldn’t have been possible,” said one publishing industry consultant in attendance who requested anonymity.
When a reporter challenged Coker about the mathematical impossibility of any market growing to 450% of its future size, Coker responded, “We were wrong to underestimate the growth of ebooks to date, so the laws of probability therefore indicate an underestimation of the probable potential of ebooks in the future, no matter how improbable. The market will grow faster than any of us expect, which means my projections understate the true potential of the ebook market.”
Smashwords, which was founded a mere three years ago, now publishes and distributes over 41,000 ebooks from 16,000 authors and publishers around the world. The company’s catalog, which added 5,400 books in the last 30 days, is on track to surpass over 75,000 ebooks by the end of 2011.
Smashwords distributes ebooks to most of the major ebook stores, including the Apple iBookstore, Barnes & Noble, Sony, Kobo and the Diesel eBook store. Noticeably absent from this list is Amazon, a problem now remedied by the acquisition.
“We’re thrilled our ebooks can now flow to our new Smashazon KindleWords store,” said Coker.
One Smashwords insider, who asked not to be identified, commented, “We reached profitability last year, but billions in profits? I want a raise! Our office is only 1,200 square feet, so where are all those thousands of Amazonian employees going to fit? And we’re based in Los Gatos, not Los Mirages. This smells of an April Fools prank to me.”
Created by the fictional merger of Smashwords and Amazon on April 1, 20111, Smashazon, Inc. will again become known as Smashwords starting April 2, 2011. Founded in 2008, privately held Smashwords operates the world’s leading ebook publishing and distribution platform serving authors, publishers, readers and retailers. Smashwords makes it free, fast and easy for the world’s authors and publishers to publish and distribute multi-format ebooks. Smashwords puts authors and publishers in full control over the pricing, sampling and marketing of their works. Authors and publishers receive 85 percent of the net proceeds from sales of their works. Smashwords has distribution relationships with leading online retailers such as Apple, Barnes & Noble, Sony, Kobo and the Diesel eBook Store, and also distributes to the leading mobile e-reading apps including Aldiko and Stanza. Smashwords is based in Los Gatos, California, and can be reached on the web at http://www.smashwords.com/. Visit the official Smashwords blog at http://blog.smashwords.com/.