26 June, 2017
Food and retail stocks floundered on Friday (Jun 16) on news of Amazon's takeover of Whole Foods Market, but the Dow edged to a fresh record on gains in energy shares. Amazon is buying Whole Foods in a deal valued at about $13.7 billion. As more and more grocery stores have begun offering organic produce, Whole Foods is no longer people's only option.
Any number of Whole Foods locations - more than 460 in the U.S., Canada and Britain - could be used as jumping off points for wider delivery and pickup of groceries and prepared foods ordered online.
Amazon founder and CEO Jeff Bezos acknowledged the almost four-decade history that Whole Foods has of "satisfying, delighting and nourishing customers", with its natural and organic products.
Texas-based Whole Foods Market is engaged in the business of natural and organic foods supermarket.
Amazon is buying Whole Foods Market for $13.7 billion.
To that end, Whole Foods supermarkets will continue to operate under their current brand, with their co-founder and CEO, John Mackey, talking about increasing shareholder value and the "innovation" the deal could bring to customers.
Amazon could expand that technology or enhance its online grocery business with the Whole Foods assets, said von Massow, who works in the university's food, agriculture and resource economics department.
Awaiting approval from Whole Foods Shareholders, the acquisition is expected to be completed during the second half of 2017. And 24 percent of millennials bought something from Whole Foods previous year, compared with 20 percent of all consumers. The company reshuffled its board and appointed a new chief financial officer in May after reporting the seventh-straight quarter of falling same-store sales, a key indicator of retail performance.
Since Whole Foods is a publicly traded company it could be scuttled if another bidder decides to offer a lot more money for the grocery chain.
"I think we will be a bell-weather for what will happen around the country", said Ed Fox, marketing professor at the Southern Methodist University Cox School of Business. According to multiple reports, Whole Foods also invested in Instacart.
But in a sign that investors believe a rival bid is likely, Whole Foods shares rose above the offer price to close at $42.68. Both companies said there will be no layoffs, but did not respond to other questions about Amazon's plans for Whole Foods. In addition, Instacart has a number of advertising partnerships with consumer packaged goods companies that pay to reach out to Instacart customers as they're shopping digitally. The stock is up more than 31% so far this year.
