Amazon Whole-Foods Deal Roils Wall Street

Amazon Whole-Foods Deal Roils Wall Street

Whole Foods Market will continue to operate stores under the Whole Foods Market brand. Kroger, the nation’s biggest supermarket chain, had earlier warned Wall Street of disappointing earnings. The Journal estimated that the Amazon announcement had wiped almost $29 billion from the aggregate market cap of rivals in the grocery category. Kroger, which had been rumored late past year to be considering a takeover of Whole Foods, fell by 9 percent Friday.

Amazon has agreed to buy the organic grocery chain for $13.7 billion, or $42 a share, in an all-cash transaction and assume the company’s debt.

Shoppers will continue to have access to Whole Foods through Instacart while the Amazon deal is going through the approval process, a source familiar with the partnerships told CNN Tech.

Armed with giant warehouses, shopper data, the latest technology and almost endless funds – and now with Whole Foods’ hundreds of physical stores – Amazon is set to reshape a US$800 billion grocery market that is already changing rapidly.

Whole Foods will keep operating stores under its name and John Mackey will as CEO, with headquarters in Austin, Texas. Right now, Ahold’s stock is down by almost 10%. Walmart and Target also took significant hits.

Amazon’s shares were up 3% at $994.45. Amazon’s stock, which recently traded over $1,000 for the first time, rose $23.54, or 2.4 percent, to close at $987.71. Target and Walmart were each down 5 percent.

$42: Per share price for Amazon’s purchase.

But after years of building up its reputation among upwardly mobile consumers, Whole Foods began to feel the pinch as shoppers began going back to other grocery stores with lower prices.

At least one local shopper at the Andover Whole Foods store had a much different perspective on the deal.

The New York Times says Amazon wants to, or already has created plans to expand its e-commerce business into physical retail. “A lot of people will love that”, said Whole Foods customer Brad Anderson. Whole Foods Market, which has more than 420 stores in more than 40 states in the USA, soared more than 29.1 percent to $42.68.

Alina Gura of Newington who was visiting the Whole Foods store with her almost two-year-old daughter, said she appreciates the quality of the food, particularly its organic products. Both companies said there will be no layoffs, but did not respond to other questions about Amazon’s plans for Whole Foods. This move is likely to bring more bad news for retailers who have endured many a sleepless night cursing Amazon and its influence on their business. At some of the Whole Foods 365 locations, the grocer’s discounted brand, consumers can use iPads to order food or find a bottle of wine.

The announcement of Amazon’s largest acquisition yet sent stock prices for major grocery chains tanking Friday morning.

In the United Kingdom, where there are Whole Foods stores, sell-offs wiped out almost $2billion (£1.5billion) from the value of stocks at grocers Tesco, Sainsbury’s and Marks & Spencer, according to This Is Money.