Amazon to buy Whole Foods
- Author: Zachary Reyes Jun 17, 2017,
Jun 17, 2017, 4:13
Amazon will acquire upscale United States grocer Whole Foods Market, known for its pricey organic options, for $13.7bn, the companies announced yesterday, in a deal that underscores the online retailer's growing influence.
The online retail giant plans to acquire the organic grocer for $42 a share in a deal valued at $13.7 Billion.
In May, under pressure from Jana Partners, Whole Foods replaced five board members and its chief financial officer.
- Supervalu. The grocery store operator lost 60 cents, or 16 percent, to $3.16.
Amazon's offer of $42 per share represents a 27 percent premium over Whole Foods' closing price on Thursday. Amazon's stock, which recently traded over $1,000 for the first time, was up $34.15, or 3.5 percent, at $998.56.
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 Texas-based chain will still continue to operate stores under its name led by co-founder and chief executive John Mackey.
The deal requires approval by Whole Foods' shareholders and regulators.
Whole Foods is one of its earliest partners and perhaps its sexiest one. Two of Canada's largest grocery chain operators, Loblaw Companies Ltd and Metro Inc both fell more than 5.5 per cent at one point.
It's rare for a single deal to have a big effect on the broader stock market, but Amazon's agreement to buy Whole Foods Market did.
"Amazon sees that industry changing significantly - and they see that people don't necessary go to the grocery store anymore".
Loblaw: In the fall of 2014, Loblaw launched its click-and-collect program, where customers order their groceries online and collect them at a designated store.
Shares of Wal-Mart Stores Inc were down 4.4 per cent at $75.46 on Friday afternoon, while Target Corp shares were down 7.1 per cent at $51.53. The parties expect to close the transaction during the second half of 2017.
But it was Whole Foods that fell behind as shoppers found alternatives to the organic and natural foods it helped popularize since its founding in 1978. Neil Saunders, managing director of the research firm Global Data Retail, said Amazon is likely to push companies that sell food to lower their prices, which will affect the companies that make and distribute those products.
With an inventory originally limited to books, Amazon's business has expanded its reach over the decades to include almost every consumer good that can be shipped.
Multiple media outlets are reporting that the online retail giant has announced that it will be buying Whole Foods. It also says Whole Foods believes there's a large opportunity for future business by teaming up with Amazon, though it didn't elaborate.