Amazon buying Whole Foods Market for $13.7 billion

Aaron Brown
June 17, 2017

Whole Foods Market specialises in organic products, which definitely makes it a prized possession for Amazon.

Once Amazon owns Whole Foods, it could introduce new perks at the grocer for Prime members, such as an express checkout lane, or Prime-member exclusive sales.

But Whole Foods customers are loyal, and some shoppers are excited about Amazon's purchase.

Amazon will be paying $42 a share in cash for the organic-food chain, making it the company's largest transaction to date. You might soon be able to order groceries from these stores via Amazon Echo, and what more, a drone might even deliver them to you. Under the terms of the deal, John Mackey would remain CEO of Whole Foods, according to a report from MarketWatch.

Whole Foods, founded in 1978, has struggled to differentiate itself as competitors and has cited pressure from restaurant chains, meal-delivery companies and traditional supermarkets. Groceries are already a fiercely competitive business, with low-priced rivals like Aldi putting pressure on traditional supermarket chains and another discounter, Lidl, opening its first USA stores just this week.

Food stocks also sank.

Worth US$42 a share, the Amazon offer was made at a 27% premium to Thursday's closing price of Whole Foods' stock. Target and Aldi have also been introducing more discounts to compete with chains such as Wal-Mart, which are known for low prices. Jana's move irked Mackey, who has referred to Whole Foods as his "baby". The app would then have automatically charged whatever products they took out of the store with them to their Amazon account.

Amazon Just Bought Whole Foods Market Inc. Here’s What You Need to Know
Amazon will pay $13.7 billion in cash for Whole Foods Market Inc. the largest deal in the Amazon’s history

For its part, Whole Foods was able to disrupt the grocery industry with a unique concept.

Drew Herdener, a spokesperson for Amazon, told The New York Times that Amazon has no plans to use this technology to replace the jobs of cashiers at Whole Foods, and no other jobs will be impacted as a result of the deal.

A cart is seen with Whole Foods Market name, Friday, June 16, 2017, in San Antonio.

There's an understanding that Amazon is threatening the very existence of companies like Target. Kroger, which had been rumored late past year to be considering a takeover of Whole Foods, was down 14 percent. Whole Foods is expensive AF, yes. If anything, things might get better.

What do you assume Amazon's plans are going to be for the future?

Some analysts on Wall Street see the acquisition as the online retailer's big entry into the food business. Customers simply scan a credit card or digital wallet upon arrival and then walk out of the store with the grocery items that they've selected.

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