Tuesday, October 26, 2010

Reverse Synergies

Amazon’s acquisition of Woot! this past summer marked the all-time best letter from a CEO announcing his company’s acquisition, as well as the infamous “We Got Acquired by Amazon” sock puppet monkey video:

Lots of people love Woot; the attitude is fun and refreshing, and they DO have plenty of great deals. It’s not hard to see why Amazon saw an attractive acquisition opportunity.

One wonders, though, if the synergies analysis for the Woot acquisition included the impact on Amazon of having to remit sales tax in Texas (Woot is based in Austin). Because Texas just submitted a bill for $269 million. That’s a heckuva lot more than what Amazon reportedly paid for Woot.

In fairness, this is the culmination of a long-running dispute between Amazon and Texas over sales taxes. But owning Woot sure isn’t going to help Amazon’s argument that it’s not responsible for remitting Texas sales tax.


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