How Will Amazon's Acquisition of One Medical Impact Investors?

Amazon and One Medical agreed to enter a definitive merger agreement. Here's why it's happening and how it will affect investors.
July 22, 2022
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Amazon (NASDAQ: AMZN) and One Medical (NASDAQ: ONEM) announced they have entered into a definitive merger agreement. As part of the deal, Amazon will acquire One Medical for $18 per share in an all-cash transaction which will value the company at $3.9 billion. The agreement also includes One Medical's net debt. 

Completion of the transaction is subject to regulatory approval and approval from shareholders of One Medical. Once the acquisition is finalized, Amir Dan Rubin will remain as CEO of One Medical.

Why is Amazon Acquiring One Medical?

Amazon piloted its healthcare business in 2019 to provide virtual urgent care services to its employees and their families in Seattle. This summer, the company offered its virtual healthcare package to companies and customers nationwide. It is also on track to deliver its hybrid care model to an additional 20 cities this year. 

Two of Amazon's four principles are its passion for innovation and long-term thinking. Telehealth is a huge and rapidly growing market, as the healthcare industry is plagued with bureaucracy and long waiting lists. By acquiring a company that has solidified its place in the industry, Amazon will be better positioned to expand its offerings and integrate its services for customer convenience, allowing it to better compete with the market leader, Teladoc (NYSE: TDOC) -- a company that Amazon interestingly signed a partnership with earlier this year. 

SVP of Amazon Health Services, Neil Lindsey said:

"We think healthcare is high on the list of experiences that need reinvention.... Together with One Medical's human-centered and technology-powered approach to healthcare, we believe we can and will help people get better care."

What does the takeover mean for investors of One Medical?

One Medical's share price exploded by 69% to $17.22, from Wednesday's close of $10.18.  If One Medical's shareholders agree to the takeover offer and the regulators give the green light, then investors in the company will receive $18 for every share they own, which is below the company's share price at the start of the year by $0.19. 

However, on average, it takes 6-12 months to acquire a company, so shareholders will have to wait a while to receive payment. If the deal goes ahead it will eradicate all short-term volatility for investors as they are already guaranteed a fixed price for their shares at the end of the period. 


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