Amazon to buy Whole Foods Market for $13.7 billion

Inc said on Friday it would buy USA organic supermarket chain Whole Foods Market Inc for $13.7 billion, including debt, marking the internet retailer's largest deal and biggest foray into the brick-and-mortar retail sector.

Major stock indexes eked out tiny gains after spending much of the day in the red, but grocery stores and retailers plunged on concern about new competition as Amazon said it would buy Whole Foods. It also had announced a board shake-up and cost-cutting plan amid pressure from activist investor Jana Partners. It's also something of a unique threat to grocery stores, food producers and other kinds of retailers because Amazon doesn't mind losing money. Whole Foods jumped $9.44, or 28.6 percent, to $42.50 while Amazon climbed $27.95, or 2.9 percent, to $992.12.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world.

The deal requires approval by Whole Foods' shareholders and regulators. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains.

The Amazon-Whole Foods combination, expected to close by the end of the year, could put even more pressure on those chains and other big grocery sellers.

Whole Foods' headquarters will remain in Austin, the company said, and longtime CEO and co-founder John Mackey will continue running the company.

Wall Street closed slightly lower Friday after a major deal between Amazon and Whole Foods dragged down stocks. In recent years, more than 4,000 grocery stores were joined under two owners after the Albertsons-Safeway and Ahold-Delhaize mergers.

"The conventional grocery store should feel threatened and incapable of responding", Wedbush Securities analyst Michael Pachter said.

On the Whole Foods Market, Bezos said million love this food chain giant as they offer natural and organic food.

Amazon could expand that technology or enhance its online grocery business with the Whole Foods assets, said von Massow, who works in the university's food, agriculture and resource economics department.

The sector, which had surged 17.4 percent in 2017, is on track for its second straight week of decline as investors booked profits amid worries of stretched valuations.

"It gives them a first step in Canada", said Michael von Massow, an associate professor at the University of Guelph, adding Amazon has shown it's committed to entering the food business.

Whole Foods, founded in 1978, saw its stock peak in 2013 at $65.24. Whole Foods shoppers will be interested to see if the company maintains its specialty focus or goes for more of its 365 limited format that is similar to Trader Joe's.

Then Kroger's stock plummeted 13% further on Friday after the Amazon-Whole Foods detail was announced.



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