Amazon paid $97 million to acquire Eero in a fire-sale deal that left some shareholders with practically nothing, according to leaked documents (AMZN)

Eero

Amazon paid $97 million to acquire Wi-Fi router maker Eero, according to documents obtained by Business Insider.
Eero hired J.P Morgan in August 2018 to act as its financial advisor, according to the documents.
The deal was a fire sale that left owners of the startup’s common stock with practically nothing, the documents reveal.
Eero’s three founders are poised to make millions off of the acquisition, according to the documents.

Amazon paid $97 million to acquire Wi-Fi router maker Eero in a fire-sale deal that left owners of the startup’s common stock with practically nothing but appears to have given the founders multi-million dollar paydays, according to documents obtained by Business Insider.

The $97 million sales price was significantly below Eero’s last reported funding round in 2017, when the San Francisco startup was valued at $215 million by investors. The cut-rate price reflects the pressure on the pioneering wireless startup as it faced increasing competition from Google and struggled under a heavy debt load.

Eero hired J.P Morgan in August 2018 to act as its financial advisor, according to the documents.

Despite the acquisition being announced in February 2019 with great fanfare — Amazon said in a statement at the time that it was "incredibly impressed with the eero team and how quickly they invented a WiFi solution that makes connected devices just work" — the terms of deal in fact valued Eero’s common stock at $0.00 per share.

The common shares were ultimately valued at 3 cents a share, according to the documents, a nominal increase that still left almost all employees and investors underwater. Mashable’s Rachel Kraus first reported on the specifics of Amazon’s acquisition of Eero.

Eero

The three cofounders of Eero, as well as certain other company insiders however, received special payouts in form of retention bonuses and other awards. Nick Weaver, the CEO and cofounder, is poised to receive more than $7 million, according to the documents.

Nathan Hardison and Timothy Schallich, the other two cofounders, could end up with more than $5 million and $4 million each, respectively, according to the documents.

The final amount paid out to the three founders could differ from what was stated in the documents.

Business Insider has reached out to Amazon for comment. Eero declined to comment.

Eero was founded in 2014 by Stanford alumni Weaver, Hardison, and Schallich. The company quickly established itself as a pioneer in mesh networking — a technology that uses multiple access points to blanket an entire area with a Wi-Fi signal rather than relying on just one router. Eero’s first product was well-received by tech critics upon launching in 2016, and companies like Google and Samsung have released similar devices.

The deal underscores Amazon’s hard-driving skills at the bargaining table and its quest to snap up assets that will allow it to create the digital "plumbing" of the modern home. The company has emerged as a clear leader in the smart home space following its Echo launch in 2014, with more than 100 million devices with Amazon’s Alexa assistant having been sold to date, as The Verge reported. Amazon’s Echo device was the most popular smart speaker of 2018 with 31% of the worldwide market share, according to Canalys.

The Eero deal is also the latest in a string of acquisitions made by Amazon that puts the company in nearly every corner of the home, from the front door to the kitchen.

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