Amazon to buy Whole Foods Market in deal valued at $13.7 billion

"This deal has dramatically flipped the table on traditional companies".

Just two years ago, Whole Foods CEO John Mackey predicted that Amazon's foray into grocery delivery would be "Amazon's Waterloo".

"I think that this takes all of the pressure off Whole Foods and gives Whole Foods the opportunity to revitalise that business and, of course, it stems the criticism from all of these activist investors", said Neil Saunders, managing director of GlobalData Retail in NY.

Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at about $13.7 billion, including Whole Foods Market's debt.

Armed with giant warehouses, shopper data, the latest technology and almost endless funds - and now with Whole Foods' hundreds of physical stores - Amazon is set to reshape a US$800 billion grocery market that is already changing rapidly. Although frequently criticized for its high prices, Whole Foods has found its home in the food industry and continues to be the grocery store of choice for many consumers.

Amazon already offers grocery-delivery services in some cities but customers seem excited at the prospect that the Whole Foods deal will make food at your doorstep even easier.

Amazon's shares were up 3% at $994.45.

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.

The deal brings to a head a years-long battle brewing between Amazon and traditional retail powerhouses such as Walmart. Kroger, which had been rumored late previous year to be considering a takeover of Whole Foods, was down 14 percent.

Amazon is buying Whole Foods Market for $13.7 billion.

But it was Whole Foods that fell behind as shoppers found "good enough" alternatives to the organic and natural foods it helped popularise. The acquisition marks an enormous step for Amazon, moving the company from being a predominantly web-based retailer to one that operates physical stores too.

Alina Gura of Newington who was visiting the Whole Foods store with her almost two-year-old daughter, said she appreciates the quality of the food, particularly its organic products.

"Amazon will reduce prices and change the assortment of products carried in Whole Foods stores to attract a larger customer base", said Ladd. The store uses sensors to track items as shoppers put them into baskets or return them to the shelf. Whole Foods was, however, costlier in 1992 as compared to today (keep the times in check) and it has been reducing the prices to keep the sales in check.

Whole Foods now has 430 stories, but after the acquisition, they will have 350 million stores because they will be on every desktop, Feinberg says.

About 450: Number of Whole Foods stores across the country.

The merger of Whole Foods and Amazon is expected to close later in 2017 after gaining approval from USA regulators and Whole Foods' stockholders.

  • Zachary Reyes