Amazon’s stance against leaks of information helped close the $3.9B deal to purchase One Medical

An updated regulatory application exposes the secret talks that Amazon has been having regarding One Medical, leading up to the Seattle tech giant’s agreement to buy the company that provides primary care to the tune of $3.9 billion, which was announced by the two companies on 21 July.

  • The filing proves that Amazon was not the only bidder on behalf of One Medical. It is identified in the filing as “Party A” in the document filed from One Medical parent company 1Life Healthcare The third bidder is CVS Health, according to anonymous sources quoted in Bloomberg News this week.
  • The competing bids from Amazon and CVS provide further proof of the keenness of large corporations to expand their reach into health technology, STAT News reports.
  • If the purchase is approved by the regulators, One Medical promises to be an integral part of Amazon’s wider healthcare plans.

In this newly disclosed backstory, what is notable is the forceful move Amazon utilized to speed up negotiations, and eventually seal the deal.

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After making its proposal in exchange for One Medical to the 1Life board, Amazon “stated that it would not be a part of the deal in the event of reports or speculations in the media regarding its involvement in a strategic transaction” according to the detailed timetable of negotiations that was included in the regulatory filing filed by 1Life today.

This warning was among the main reasons behind 1Life’s 1Life board to go ahead with Amazon’s $18/share offer instead of pursuing an increase in price according to the filing.

The board was of the opinion that “additional discussion on price was likely to result in an increase in price from Amazon but could cause the transaction to be at risk,” due to factors like a possibility of leaks to the media that could result in Amazon to pull its offer entirely in the event of a leak, as per the filing.

The risk of leaks wasn’t an insignificant worry for Amazon due to the events that had occurred before. This is how the filing describes an earlier sequence of events.

Bloomberg’s report that day said that 1Life/One Medical had drawn “preliminary interest from companies like CVS Health Corp.,” citing unnamed sources who are familiar with the issue. “Talks with CVS are not in place anymore however there are potential buyers weighing the pros and cons of a merger,” the story added.

Of course, various players in any negotiation could employ strategic leaks to gain leverage at different times in the negotiations, with various reasons. The 1Life document doesn’t give the source for the Bloomberg story.

However, the document notes that 1Life board’s choice to go to accept the Amazon offer, with no any further negotiation on price, was partly based on “lack of communication from other potential acquirers in the wake of the news reports of July 5th about rumors of a potential strategic acquisition that could involve 1Life.”

In the end, the strategy of Amazon worked by keeping the company’s interest with One Medical out of the news, and accelerating the transaction as well as making an “Background to the Merger” section of One Life’s SEC filing essential for anyone working who is involved in corporate M&A.

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