Amazon To Buy Upmarket Grocer Whole Foods For US$13.7b

Amazon acquires huge grocery store chain- Will the online giant monopolize the retail space

Eric Broder Van Dyke

Whole Foods, a pioneer in natural and organic products, has 456 stores, which young, high-end shoppers flock to.

"In some ways, it's more of the same than different, at least from the perspective of where we sit as a regional grocery store that has long grown and thrived side-by-side with Amazon Fresh and Whole Foods", Hardy said Friday.

In the US "this adds 440 refrigerated warehouses within 10 miles of probably 80% of the population", said Michael Pachter, an analyst for Wedbush Securities. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw.

But Instacart is also a competitor to Amazon's growing grocery delivery service, AmazonFresh.

Amazon is buying Whole Foods in a $13.7B deal.

Texas-based Whole Foods Market is engaged in the business of natural and organic foods supermarket.

In Whole Foods, Amazon is acquiring a company that has recently come under pressure from investors for its lagging performance.

The grocery chain, known for its organic options, had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains.

The $42-per-share, all-cash deal, expected to close later this year, includes Whole Foods' net debt and represents about a 27 percent premium to its closing stock price on Thursday. Target tumbled by 10 percent and Walmart was down by 6 percent. Amazon could integrate it with technological advancements to improve the shopping experience, and, in turn, help Whole Foods rein in revenue. It's easy to imagine that Amazon might later decide to integrate this technology from its warehouses to its Amazon Go shops, and probably Whole Foods stores, too. Analysts say the Whole Foods footprint and distribution channel could theoretically make 5-minute deliveries a reality.

The post Amazon-Whole Foods Marriage Could Disrupt Grocery Business (NASDAQ:AMZN) appeared first on Market Exclusive.

John Mackey will remain CEO of the company.

Amazon is already playing with innovative ways to make grocery store runs more convenient.

Barclay's analyst Karen Short today noted that another offer could be placed on the table for Whole Foods, prompting her to raise her stock price target for Whole Foods to $48 per share.

Whole Foods, founded in 1978, saw its stock peak in 2013 at $65.24.

Amazon could also get a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs.

"I think they are going to get more competitive, they will become more innovative in other services they can offer", Johnson said. But if customers know that what they are getting is the same as what they'd get at the local store, they are more likely to try it out. "It'll be interesting to see what [technological innovations] they choose to pull forward into a larger-scale brick-and-mortar environment - which pieces are most resonant for shoppers and consumers". The stores could also showcase gadgets such as Kindle e-readers and Fire tablets.

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