Published: Tue, June 20, 2017
Finance | By Laverne Griffith

Amazon buying Whole Foods for $13.7 billion

Amazon buying Whole Foods for $13.7 billion

Shares of many grocers and retailers slumped Friday after Amazon announced a $14 billion deal to buy high-end grocery chain Whole Foods Market.

"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", said Amazon found and chief executive Jeff Bezos. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods.

Charlie O'Shea, a Moody's lead retail analyst, told the Associated Press news agency that the deal could be "transformative, not just for food retail, but for retail in general". And the company has launched an offshoot chain named after its "365" private label brand, a nod to the popularity of no-frills chains that draw shoppers with low prices. 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. While Amazon has been building more and more delivery hubs, the Whole Foods deal gives it 456 stores that it can instantly fit into that network, said Josh Olson, analyst with Edward Jones.

"Dominant players like Walmart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks", O'Shea said.

Americans have been slowly moving toward online grocery shopping. Others say the growing options are intriguing with Amazon buying Whole Foods Market.

America's grocery stores are undergoing tremendous change.

Amazon has been accused of destroying portions of the entire brick-and-mortar retail economy.

Fighter jets deal shows deep United States support
Qatar's Defense Ministry said the deal would create 60,000 jobs in 42 USA states while reducing the burden on US forces.

Sony Debut New God of War Trailer at E3
Last year, Sony surprised everyone by starting their E3 2016 presser with a gameplay demo of an all-new take on God of War . Who looks awesome , I definitely thought he was going to eat them, but apparently he was speaking to them.

N Korea fires volley of cruise missiles, fifth test in a month
According to USA Today , the launch marked the fourth new missile system introduced and successfully tested this year alone. It marked the fifth missile test-fire by the North since liberal South Korean President Moon Jae-in took office May 10.

Whole Foods Market started in 1978, and employees about 87000 people in its roughly 460 stores across the US, UK and Canada. The grocery store operator was also under pressure from activist investor Jana Partners. It could have built up its groceries business without acquisitions, said Neil Saunders, managing director of GlobalData Retail, but that would have been costly and time-consuming. Other retail and food distribution-related stocks in the USA and Europe, including Wal-Mart and Target, followed suit. Labor leaders voiced concern Friday that Amazon's move into the grocery sector will cost even more retail jobs.

But is Amazon turning into a monopoly? It had previously announced plans to open a 1,800-square-foot store called Amazon Go in Seattle, Washington. Shoppers skip the checkout line, and their Amazon accounts get automatically charged. "The strategic reasons are that Amazon can put the other bidder out of business, and Whole Foods' investment in delivery creates an instant offense against Amazon Fresh delivery".

Whole Foods has also invested an estimated $36 million in Instacart. The stock is up more than 31% so far this year.

As for its stock price, the grocer skyrocketed up almost 30 percent in just one day.

Whole Foods sent a letter to customers after the merger announcement, calling the agreement a new chapter in Whole Foods' history and an incredible opportunity.

At first, consumers likely will see Whole Foods products in the AmazonFresh lineup, and just for Prime members.

Apparently longtime CEO John Mackey will stay the CEO and the headquarters will stay in Austin.

Like this: