24 June, 2017
Amazon is buying Whole Foods Market in a deal valued at $13.7 billion, uniting the on-line giant with the grocery store chain that touts fresh organic foods.
Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase would let it expand to many more. Kroger, the nation's biggest supermarket chain, had earlier warned Wall Street of disappointing earnings. The Journal estimated that the Amazon announcement had wiped almost $29 billion from the aggregate market cap of rivals in the grocery category.
Amazon is buying Whole Foods in a stunning move that gives it hundreds of stores across the USA - a brand-new laboratory for radical retail experiments that could revolutionize the way people buy groceries.
The definitive merger agreement means Amazon will pay $42 per share in an all-cash transaction, and take on Whole Foods Market's net debt.
JPMorgan analyst Doug Anmuth believes that the buyout would allow Amazon to be more innovative in delivering the customer buying experience in Whole Foods stores. She's skeptical that groceries will go purely online and thinks it'll be more of a hybrid model, where people use a mix of online ordering, restaurants and traditional grocery stores.
"It's amusing. I was just ordering something on Amazon", said Nick Yezierski, a hotel manager who was eating breakfast outside the Whole Foods flagship store in Austin, Texas. 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.
Following the announcement of Amazon's plan to purchase Whole Foods Market, Inc.
The deal prompted a round of jokes on Twitter, with commentators poking fun at Amazon's drone and artificial intelligence technology and numerous riffs on prices at a store dubbed "Whole Paycheck".
Whole Foods may offer fewer jobs going forward if Amazon takes it over.
Amazon has been exploring real-world brick and mortar retail stores lately, launching several physical bookstores and adding a customer pick-up option to its AmazonFresh grocery service, with varying results.
"The retail sector is used to change, but every so often an event occurs that shakes the industry to its core", said Neil Saunders, managing director of research firm GlobalData Retail.
Hartmann said he expects the online retailer to introduce some efficiencies to Whole Foods' operation. While it's true that many companies Amazon has acquired have continued to operate independently, it's hard not to wonder whether we'll start seeing Kindles and Amazon Echos popping up at Whole Foods. The stock is up more than 31% so far this year.
When it raised $400 million in March, Instacart said it operated in 35 markets and had 135 partnerships with grocery retailers around the country. The deal is expected to close later this year. "Whole Foods is expensive enough".
