Amazon to buy owner Quidsi for $500M

November 8, 2010

(AP) -- Expanding its online retail empire, Inc. said Monday it is buying Quidsi, the owner of and, for $500 million in cash.

Amazon said Quidsi will continue to operate independently after the acquisition, which is expected to close in December.

Amazon plans assume about $45 million in debt and other obligations as part of the deal, which has been approved by Quidsi's shareholders. sells health, beauty and cleaning products online, while sells baby-care items, including food and maternity wear. And Quidsi recently launched, which sells higher-end skin care, makeup and other products online.

The deal "positions Amazon to dominate the baby category," said Cowen and Co. analyst Jim Friedland in a note to investors. Quidsi, he added, is expected to generate $300 million of revenue in 2010, up 67 percent year-over-year.

The acquisition of Quidsi "will help Amazon become a category killer in the baby segment," Friedland wrote. "In our view - and this is coming from a dad with a 9-week-old - has been beating Amazon at its own game in the nonapparel baby category." usually has better selection, better stock levels and lower prices, he said. The acquisition thus eliminates a key rival, and "prevents online and offline rivals from buying the asset to compete more aggressively in the baby category," Friedland said.

Amazon, based in Seattle, bought popular online shoe retailer, for $850 million last year. Zappos also operates independently as a unit of Amazon.

Shares of Amazon slid $1.30 to $169.47 in morning trading.

Explore further: Amazon launches videogame trade-in store


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