Amazon is set to purchase Whole Foods in a USD 13.7 billion deal (USD 42 per share). This move marks Amazon鈥檚 biggest foray yet into traditional retailing, and has sent Whole Foods鈥� shares shooting upwards by 28%. The grocery store chain will continue to operate under the Whole Foods name. Shares of Amazon rose about 3% after the announcement of this deal was made, and the acquisition is expected to be finalized in the second half of this year. The biggest news seems to be Amazon buying Whole Foods at $42 a share.
This expansion into the food and beverage industry comes on the heels of Amazon鈥檚 entry into fashion and garment selling, which has put them on track to dominate the US鈥檚 clothing and textile industry. This isn鈥檛 Amazon鈥檚 first venture into grocery and food retailing鈥攖he e-commerce giant already offers a range of ready-to-eat and pre-packaged foods in its 鈥楪rocery & Gourmet鈥� segment; it also provides AmazonFresh grocery delivery services and Amazon Pantry access for Prime members in certain regions鈥攂ut it is their biggest acquisition ever, and is likely to be their most profitable. Should Whole Foods accept the deal, Amazon food will be on track to disrupt grocery stores worldwide. According to Instinet, Amazon will grow marginally faster than Walmart and substantially faster than Costco, making it a fierce competitor in the grocery market on a global scale.
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Whole Foods has reportedly been under pressure from investors to sell itself to a larger corporation due to falling sales and declining performance over several quarters. In a statement, Whole Foods C.E.O. John Mackey, who is expected to stay on in his current role, said, 鈥淭his partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.鈥�
News of this acquisition has already lowered stocks for major grocery retailers: Kroger鈥檚 shares were down by 13.76 after the announcement. Walmart shares were down by 6.1% and Costco鈥檚 fell by 6.3%. What the future once held for both online and physical grocery retailers is sure to be transformed as a result of this impressive push into the market by Amazon.
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