Amazon buying Whole Foods in $13.7 billion deal; grocery stocks tumble

Dollar General

And much of the battle is expected to take place online, on Amazon's home turf.

Amazon runs their own online grocery - Amazon Fresh - which started a decade ago in Seattle, Washington.

"The ramifications for all of retail are seismic - not just retailers that sell grocery, but for everyone", Gordon Haskett analyst Chuck Grom said. This deal will put it on the map of the $700 billion grocery market.

The Amazon.com Inc. (NASDAQ: AMZN) deal to buy Whole Foods Market Inc. Amazon's shares rose 2.4 percent to $987.71, adding $11 billion to its market capitalization, which in one sense makes the acquisition almost free for Amazon shareholders.

On the flip side, Amazon could use Whole Foods stores as pickup locations for deliveries, an option Amazon already offers in many cities by installing lockers at 7-Eleven and other retailers.

The transaction is subject to approval by Whole Foods Market's shareholders, regulatory approvals and other customary closing conditions, but the parties expect to close the transaction in the second half of 2017, it added.




The deal sent shockwaves across the food distribution market and beyond.

Peggy Hall, a Unionville resident shopping Friday at a Whole Foods supermarket in West Hartford Center, said she would probably not buy food online.

Whole Foods stores are in areas where the population is younger and more affluent than the USA average, which matches with Amazon's strategy, according to NPD Group, a market-research firm. Currently, WFM operates approximately 460 grocery stores among the U.S., Canada and the United Kingdom, giving Amazon more operational points in major cities and suburbs. For 10 years, the company has offered a type of food delivery service via Fresh, but that simply won't do, it seems.

Whole Foods, known for its organic and specialty food will continue to operate stores under its brand and will continue to be led by cofounder and chief executive John Mackey, the two companies said.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales. Kroger, one of the world's biggest supermarket chains, faced a $3 billion fall in market value. It has expanded from a book seller into a merchant of almost all consumer products, as well as producing videos. "That is the reality today at Amazon, and it will no doubt become the reality at Whole Foods". The stores could teach cooking skills, hold classes and educate about food. Earlier this week rumors were swelling that Amazon had its sights on acquiring messaging technology company Slack, turns out it was Whole Foods that would be first. Despite its likely new ownership equation-the deal hasn't yet closed-Instacart is doubling down on its anti-Amazon rhetoric.

But if Amazon can be the one-stop shop for everything - groceries had been one of the key missing elements - customers would have even less of a need to go to Walmart or elsewhere.

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