Amazon to Acquire Whole Foods Market for $13.7 Billion

Dollar General

Dollar General

Amazon is buying Whole Foods Market, for $42 per share in a deal that values the grocery outlet at $US13.7 billion.

The deal represents a dramatic turn in strategy for Amazon, which has offered food delivery through its AmazonFresh service for a decade, but has not made a major dent in the $700bn grocery market.

The "implications ripple far beyond the food segment, where 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.

"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", Amazon CEO Jeff Bezos said in a statement.

The Journal said buying Whole Foods allows Amazon to quickly grab a bigger portion of the estimated $674 billion USA market for edible groceries, according to consulting firm Kantar Retail. Others say the growing options are intriguing with Amazon buying Whole Foods Market.

The relationship between Instacart and Whole Foods dates back to 2014 but deepened in 2016, when they announced a new five year deal.

The Whole Foods Market in Midtown New York is seen on June 16, 2017.

Wal-Mart Stores Inc said on Friday it would buy online men's fashion retailer Bonobos Inc for $310 million, in its fourth e-commerce deal in under a year, as it seeks to bridge the gap with e-commerce leader Amazon.com Inc.

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Amazon also has been testing automation technology at a Seattle convenience store that's now open only to Amazon employees. On Friday it soared $9.62, or 29 percent, to $42.68, above the $42 a share Amazon agreed to pay.

Whole Foods will keep its headquarters in Austin and continue to operate under the Whole Foods brand with John Mackey remaining as CEO.

"It is hard to say what Amazon's online strategy will be for Whole Foods", she said.

In Whole Foods, it is acquiring a company that has recently come under pressure from investors for its lagging performance. Whole Foods, whose fleet of stores now numbers more than 430 locations, has found it hard to attract more mainstream consumers as Walmart and other large chains have stepped up their sales of natural and organic products. State Street and Fidelity both have a substantial amount of shares in Whole Foods, as BBJ reported. "The checkout-free experience in Go is not yet ready for prime-time as it is still only being beta-tested by AMZN employees, but we believe the Go technology could be rolled out to physical retail, including Whole Foods, over time".

Amazon is a beast in the world of online retailers.

Shares of iconic food-staple companies also took a hit.

"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.

The acquisition comes just days after Mackey, in an interview with Texas Monthly magazine, called activist investor Jana Partners "greedy bastards", and accused Jana of trying to make money by forcing Whole Foods to sell itself.

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