A new regulatory filing details Amazon’s behind-the-scenes talks for One Medical, leading up to the Seattle tech giant’s agreement to acquire the primary care company for $3.9 billion, announced by the companies July 21.
But in this newly revealed backstory, what really stands out is the power move that Amazon used to accelerate the negotiations and ultimately seal the deal.
After making its offer for One Medical to the 1Life board, Amazon “stated that it would disengage if there were any rumors or public speculation about its potential interest in such a strategic transaction,” according to a detailed timeline of the negotiations included in the regulatory filing by 1Life this week.
That warning was one of the factors that later prompted the 1Life board to proceed with Amazon’s offer of $18/share, rather than pursuing a higher price, the filing says.
The board believed that “additional negotiation on price was highly unlikely to result in an increased offer from Amazon and instead could put the transaction at risk,” due to factors including a potential leak to the media that would cause Amazon to withdraw its offer altogether, according to the filing.
The possibility of leaks wasn’t an idle concern for Amazon, given what had already happened. Here’s how the filing describes an earlier series of events.
On July 5, 2022, [1Life CEO Amir Dan] Rubin and the Chief Financial Officer of Party A had a conversation in which Mr. Rubin relayed that if Party A had continued interest in exploring a strategic relationship with 1Life, then time was of the essence as 1Life was exploring its strategic alternatives on an expedited timeline. The Chief Financial Officer of Party A indicated that he would share this information with Party A leadership and would follow up.
Later on July 5, 2022, Bloomberg and other media publications reported rumors that 1Life was exploring strategic alternatives after potential acquirers expressed preliminary interest in a strategic transaction with 1Life. Following the reports, 1Life’s stock price closed at $10.34 on July 5, 2022, compared to $8.28 on July 1, 2022 (the trading day immediately prior to the reports).
Bloomberg’s story at the time said 1Life/One Medical had drawn “preliminary interest from companies including CVS Health Corp.,” citing unnamed people familiar with the matter. “Talks with CVS are no longer active but there are other potential suitors weighing the merits of a deal,” the story added.
Of course, different players in any negotiation can use strategic leaks to seek leverage at different points in the talks, for different reasons. The 1Life filing doesn’t go into any detail about the sources for the Bloomberg story.
However, the filing does note that the 1Life board’s decision to proceed with the Amazon offer, without further negotiation over price, was based in part a “lack of contact from other potential acquirers following the July 5th media reports of rumors of a potential strategic transaction involving 1Life.”
Ultimately, Amazon’s strategy worked, keeping its interest in One Medical out of the news, accelerating the deal, and making the “Background of the Merger” section in 1Life’s SEC filing required reading for anyone in corporate M&A.