Amazon is buying Whole Foods in a deal valued at $13.7 billion

[Teh One Who Knocks]

Sarah Whitten - CNBC


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Amazon said Friday it plans to acquire Whole Foods Market for $42 a share, in a deal valued at $13.7 billion.

Whole Foods' John Mackey will remain CEO of the grocery store chain after the deal closes, and the store will continue to operate under the Whole Foods brand.

The deal is expected to close in the second half year.

"This partnership presents an opportunity to maximize value for Whole Foods Market's shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers," Mackey said in a statement.

Whole Foods has been under pressure from Jana Partners hedge fund and money management firm Neuberger Berman, which have called on Whole Foods to sell itself. The investors have criticized Whole Foods for its poor performance, and have suggested the chain could be merged with another grocer.

Amazon has been pushing to expand its online grocery business.

Online has been the next frontier for the grocery business. However, very few people purchase their groceries online even as more shoppers switch to buying other goods online.

[RBP]

Wow. I knew Whole Foods was declining and in trouble of an acquisition, but I did NOT see this coming.

[Teh One Who Knocks]

Adam Shell , USA TODAY


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Supermarket stocks and shares of companies that sell groceries are now spoiled in the eyes of investors after Amazon announced a nearly $14 billion purchase of Whole Foods Market on Friday.

In early afternoon trading following Amazon's announced entry into the food-selling business, shares of Walmart tumbled more than 4%, making it the biggest loser in the blue-chip Dow Jones industrial average. Target shares plunged 7%. Costco shares were down more than 6%. Supermarket chains also took big hits, with Kroger down more than 11% and Supervalu down nearly 13%. Sprouts Farmers Market, which gets roughly 60% of its sales selling fresh produce, was off more than 5%. All of these stocks were trading above their lows for the day.

Amazon's move is a threat to supermarket chains like Kroger, fresh produce retailers like Sprouts Farmers Market, big-box retailers like Walmart and Target that have moved aggressively into groceries, and companies like Costco that sell bulk products, including food, at discounted prices.

"The entry of the king of web retail into the food space has to rattle the other companies," said Brad McMillan, chief investment officer at Commonwealth Financial Network.

Companies in the food business, he adds, are also under attack from another recent entry into the U.S. grocery pace, German grocer Lidl. "Both global players maximize efficiencies ... which probably portends price wars," McMillan said.

Shares of the online retail giant rose 3%. Whole Foods Market, which has more than 420 stores in the U.S., soared more than 28% to $42.26 . Amazon is paying $42 per share for Whole Foods, which is a 27% premium from Thursday's night close.

Amazon, known for its low prices, will likely take market share from competitors and hurt their profit margins if they have to lower prices to compete.

Amazon's deal also gives it a brick-and-mortar footprint around the U.S.

[Muddy]

Ugh.. Somebody stop these guys..

[PorkChopSandwiches]

Its too late, they are the world now

[Teh One Who Knocks]

They just started up the Prime Now 2 hour delivery in Denver last Thursday.

[PorkChopSandwiches]

half of every dollar spent on the internet goes to Amazon.....let that sink in a bit

[Muddy]

People were terrified of Walmart taking over... You aint seen shit yet..

[Teh One Who Knocks]

half of every dollar spent on the internet goes to Amazon.....let that sink in a bit

I have no problem (right now) with Amazon. They usually have what I need and for a good price. :dunno:

[RBP]

They just started up the Prime Now 2 hour delivery in Denver last Thursday.

The GF uses it a lot here. Loves it. It's not 2-hour, per say. It's the next available 2-hour window, which could be 4-6 hours, but still.

[PorkChopSandwiches]

I have no problem (right now) with Amazon. They usually have what I need and for a good price. :dunno:

I spend way more than half my online spending on amazon, probably like 90%. I dont have a problem with them .....yet

[Muddy]

I try my best not to buy from them ever.. They are murderous to small businesses..

[Godfather]

I just hope they bring that concept ad they posted of a grocery store where you just grab shit and walk out, becomes reality soon. That would be amazing.

[PorkChopSandwiches]

I try my best not to buy from them ever.. They are murderous to small businesses..

I run a small business through them.

[Muddy]

I want to have a chip put into my body so they can control the way I spend..

[Muddy]

"Alexa" rape me...

[Teh One Who Knocks]

I just hope they bring that concept ad they posted of a grocery store where you just grab shit and walk out, becomes reality soon. That would be amazing.

Sam's Club has something that's close...they have their 'Scan and Go' app. You tie whatever payment card you want to use to the app, you scan the barcodes of what you are buying with the app on your phone, and you skip the checkout completely.