Deal Talk: Amazon Stays Mum, While Whole Foods Goes Off Script

The $13.7 billion deal is expected to be completed in the second half of 2017. An Amazon spokesperson told Bloomberg that there are no plans for job cuts or increased automation at Whole Foods stores, and Mackey certainly didn't mention at the town hall that any jobs might be eliminated.

Exacerbating the threat to Costco is the fact that, according to Cowan & Co., 64% of Costco members now also have an Amazon Prime membership.

Amazon agreed to pay $42 for each Whole Foods share under their agreement announced Friday.

Whole Foods holds a 2.7 percent market share in the $611.9-billion grocery store industry.

In his address, Mackey hinted at his answer to one of the big questions hanging over the Amazon-Whole Foods merger. Amazon's stock closed Monday at $995.17 a share, up $7.46. Food and CPG manufacturers will now need to work more closely with Amazon and leverage their assets, including product innovation, sales/marketing, loyal customers, owned media, etc., and partner with all retailers in their initiatives to drive compelling shopping experience. That's because Amazon poses such a competitive threat, especially when it comes to putting downward pressure on prices and profit margins. "ORCRP016487-topic.html" class="local_link" >Wal-Mart Stores Inc.


Technology is just one way Amazon stands to change Whole Foods and its culture, though. According to Madeline Hurley, IBISWorld senior analyst, this acquisition means Amazon will be able to reach more consumers than ever before. Wilke also noted that Mackey would continue to CEO of Whole Foods, which prompted Mackey to interject by continuing the romantic allusion. By acquiring Whole Foods, Amazon now owns a familiar name with a lot of value in the market. "I have purchased from Amazon for five years". Believe it or not, Whole Foods has already been testing price reductions on certain products due to competition from Walmart and Trader Joe's. Yardeni notes that Amazon founder and Chief Executive Jeff Bezos has brought deflation to the book industry, mall retailers, and the cloud - giving Federal Reserve Chairman Janet Yellen something to think about, as Investor's Business Daily reported in May.

"If anything", she said, "the acquisition will make shopping at Whole Foods more convenient". "He could make some shocking changes that could be deadly to some of these [existing] brands".

In a town hall meeting the day the deal was announced, Whole Foods CEO John Mackey shed light on how the deal went down - and it's unorthodox. Whole Foods' footprint is far smaller with about 440 locations, though those are mostly in urban and affluent neighborhoods where delivery might be more in demand.

Whole Foods' board, of course, has a fiduciary duty to its stockholders to consider any viable takeover offer.

Latest News