Amazon Charts Future of Food Shopping with Whole Foods Deal

Posted June 20, 2017

The acquisition, expected to close this year, is more than 10 times larger than what Amazon spent on its next-biggest deal, the purchase of online shoe retailer Zappos in 2009.

Excluding debt, the deal is valued at US$13.39 billion, based on 318.9 million diluted shares outstanding as of April 9.

The $42 a share offer from Amazon is a 27 percent premium over Whole Foods closing stock price on Thursday.

Whole Foods Market is renowned for offering the best organic and natural foods in the world-and merging its business with another world-known ecommerce giant only means more good news for consumers.

The deal unites the online juggernaut with the grocery store chain that fell behind as the organic and natural foods it helped popularize expanded to more locations and shoppers found "good enough" alternatives.

John Mackey will remain chief executive of Whole Foods Market, which will keep its headquarters in Austin, TX, and operate as a subsidiary of Amazon. "Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades". (NASDAQ:WFM), shopping center REITs tumbled more than their peers in the real estate sector. (NASDAQ:AMZN) "a launching pad not just for food but possibly drugs as well where customers aren't willing to wait even a day".

The company also has been testing sensors at a convenience store in Seattle to track items as shoppers put them into baskets or return them to the shelf.

So what if you could get Whole Foods products or other groceries delivered to your door?

The acquisition stands as a huge boost for Amazon's strategy to integrate the brick-and-mortar model into its business.

Instinet analyst Anthony DiClemente said in a note quoted by CNBC that Amazon is going to disrupt grocery business.

The grocery industry hasn't been immune - old-line supermarket chain A&P went bankrupt in 2015.

West Hartford resident Nancy Kennedy, 88, who stopped by the Whole Foods store to shop, said she does not go online because she's not familiar with digital technology. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer". Shares of Whole Foods shot up 29 percent and closed at $42.68 amid the news. The stock is up more than 31% so far this year. That fits with Whole Foods private-label push to compete on price, and gives Amazon a bigger foundation on which to develop its own food brands.

Almost $1.5T: Amount spent by Americans on food in a year. While both companies aren't headquartered here - check out Austin Inno for the deal's impact on Whole Foods' home base - the deal is certainly going to have an impact here and everywhere else across the country, if only due to their collective reach.