It has just been announced that Amazon has purchased the vastly popular Internet shoe retailer Zappos for $850 million. The sale, confirmed in a letter sent from Zappos CEO Tony Hsieh to his employees, was for $807 million in Amazon stock, plus $40 million in cash and restricted stock.

Amazon CEO Jeff Bezos has also given some feedback on the acquisition as part of a video that he put out today, embedded above.

You can check out the full press release, after the break.

Amazon.com to Acquire Zappos.com

SEATTLE—(BUSINESS WIRE)—Amazon.com, Inc. (NASDAQ:AMZN) today announced that it has reached an agreement to acquire Zappos.com, Inc. a leader in online apparel and footwear sales that strives to provide shoppers with the best possible service and selection. The acquisition brings together two companies who share a passion for serving customers and whose customers benefit from cultures of innovation and long term thinking.

“Zappos is a customer focused company,” said Jeff Bezos, Founder and CEO of Amazon.com. “We see great opportunities for both companies to learn from each other and create even better experiences for our customers.”

Under the terms of the agreement, Amazon will acquire all of the outstanding shares and assume all outstanding options and warrants of Zappos in exchange for approximately 10 million shares of Amazon common stock, equal to approximately $807 million based on the average closing price for the 45 trading days ending July 17, 2009. In addition, Amazon will provide Zappos employees with $40 million in cash and restricted stock units. Subject to various closing conditions, the acquisition is expected to close during the Fall of 2009.

Following the acquisition, the Zappos management team will remain intact and Zappos will operate its successful brand, customer experience and unique culture of service independently with headquarters in Las Vegas, NV.

“We are joining forces with Amazon because there is a huge opportunity to utilize each other’s strengths and move even faster towards our vision of delivering happiness to customers, employees and vendors,” said Tony Hsieh, CEO of Zappos. “We will continue to build the Zappos brand and culture in our own unique way, and we believe Amazon is the best partner to help us do this over the long term.”