Amazon bought Whole Foods

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Wackbag Staff
#1
http://www.reuters.com/article/us-whole-foods-m-a-amazon-idUSKBN1971QJ

Amazon to buy Whole Foods for $13.7 billion, wielding online might in brick-and-mortar world

By Lauren Hirsch and Jeffrey Dastin

Amazon.com Inc said on Friday it would buy Whole Foods Market Inc for $13.7 billion, in an embrace of brick-and-mortar stores that could turn the high-end grocer into a mass-market merchant and upend the already struggling U.S. retail industry.

Amazon used aggressive pricing to become an e-commerce retail juggernaut and has recently been experimenting with brick-and-mortar outlets. It will take over a natural and organic grocer pioneer with 456 stores, a mecca for young, high-end shoppers, that has been struggling to rein in prices and integrate technology.

The deal represents a dramatic turn in strategy for Amazon, which has offered food delivery through its Fresh service for a decade but has not made a major dent in the $700 billion grocery market.

“The ramifications for all of retail are seismic – not just retailers that sell grocery, but for everyone,” Gordon Haskett analyst Chuck Grom said.

Shares of dozens of supermarkets, food producers, payment processors and shopping malls collectively lost at least $35 billion in U.S. market value on Friday as the news reverberated across financial markets.

Shares of grocer Kroger Co swooned 9.2 percent, while Wal-Mart Stores Inc fell 4.7 percent, signaling fears that Amazon could broaden Whole Foods' product mix and cut prices.

Amazon's shares rose 2.4 percent to $987.71, adding $11 billion to its market capitalization, which in one sense makes the acquisition nearly free for Amazon shareholders.

"Supermarkets will now have to contend with not only competition with each other and non-traditional grocers like Wal-Mart Stores Inc and Target Corp, but with a retailer like Amazon which has the financial capacity to price aggressively," said Mickey Chadha, vice president and senior credit officer at Moody's Investors Service.

Amazon agreed to pay $42 per share in cash for Whole Foods, a 27 percent premium on the Austin, Texas-based grocer's closing share price on Thursday.

But in a sign that investors believe a rival bid is likely, Whole Foods shares rose above the offer price to close at $42.68.
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NO VALUE IN STATUS QUO

A former grocery expert at Amazon predicted that the chain nicknamed "Whole Paycheck" would add a selection of discounted food and build out non-grocery areas within stores, particularly for pharmacy and Amazon devices.

"There’s no value in Amazon keeping the status quo at Whole Foods. Whole Foods was losing market share to Kroger," said Brittain Ladd, who until earlier this year was a senior manager working to roll out AmazonFresh globally.

"It’s pharmacy. It’s having the ability to put stores that are similar to Apple stores inside Whole Foods," he said.

Amazon has been looking at shop layouts that could allow traditional in-store purchase, online ordering with on-site pickup, and home delivery, using store warehouse space as a distribution point, Ladd said.

Despite Amazon's reputation for harnessing technology, a prototype store inside its corporate office in Seattle, called Amazon Go, which uses sensors and tech-savvy cameras to detect shoppers' selections and then charge their Amazon accounts, has rolled out more slowly than planned, a person familiar with the matter said.


And while some analysts expect Amazon to bring vast buying power to Whole Foods, Amazon's heft in the food market is far smaller than in other areas, and high demand for organic products gives farmers unusual bargaining power.

WHOLE FOODS WAS UNDER PRESSURE

The deal unfolded after Jeff Bezos, Amazon's chief executive officer, approached Whole Foods CEO John Mackey about a month ago and received an eager response from Mackey, two people familiar with the matter said.

The grocer will continue to operate stores under the Whole Foods Market brand, and Mackey will remain CEO, the companies said.

Whole Foods has posted seven straight quarterly sales declines at established stores and recently overhauled its board of directors in the face of pressure from activist hedge fund Jana Partners LLC.
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Jana, which disclosed an 8.3 percent stake in Whole Foods in April and is the company's second biggest shareholder, stands to make roughly $300 million from the sale to Amazon.

The deal is for $13.4 billion in cash and the remainder in debt. The acquisition price implies a trailing 12-month price-to-earnings multiple for Whole Foods of 31 times, versus a 14.4 average for the S&P 500 Food Retail index.

Amazon and Whole Foods expect to close the deal during the second half of 2017.

EYES ON GROCERY SHOPPERS

Amazon, started in Seattle in 1994 by Bezos, a former hedge fund manager, has grown into the world's biggest diversified online retailer, with a market capitalization of nearly $500 billion. It has expanded from a book seller into a merchant of nearly all consumer products, as well as producing videos.

Both Amazon and Whole Foods cater to younger consumers including millennials as well as the affluent.

"Amazon could bring technology to all Whole Foods locations, or it could absorb Whole Foods into AmazonFresh. Either way, it's good for consumers like myself," said Di Wu, a New York resident in her early 30s who is a member of Amazon's Prime fast-shipping club and who shops at Whole Foods at least twice a week.

"Amazon is known to drive down prices and make the shopping experience more efficient," Wu said.

Goldman Sachs Group Inc advised Amazon on the deal and provided bridge financing. Bank of America Corp also provided financing to Amazon, while Evercore Partners Inc advised Whole Foods.

(Reporting by Lauren Hirsch in New York and Jeffrey Dastin in San Francisco; Additional reporting by Anya George Tharakan in Bangalore, Angela Moon in New York, Lisa Baertlein in Los Angeles, Noel Randewich in San Francisco, Richa Naidu in Chicago; Writing by Peter Henderson and Greg Roumeliotis; Editing by Leslie Adler)
 

NotSoFast

Registered User
#3
They buy the whole company for what amounts to about 7 carts of their groceries.

Get it? Their food is expensive. El oh el.
 

jnoble

Lingering longer for a longering linger
#6
"Whole Foods?" More like "Whole Paycheck", amiright?
 

jnoble

Lingering longer for a longering linger
#7
Anyway, fuck that hipster store with its $8 a gallon organic milk. Anyone who thinks they're eating healthier by shopping only overpriced organic/GMO/gluten free is a rube and an asshole
 

domelogic

Registered User
#8
You keep reading amazon wants in the supermarket area but why Whole Foods? That does not seem to fit their model. Then again they are trying to put an and to comparing prices somehow
 

whiskeyguy

PR representative for Drunk Whiskeyguy.
Donator
#9
You keep reading amazon wants in the supermarket area but why Whole Foods? That does not seem to fit their model. Then again they are trying to put an and to comparing prices somehow
Not sure how Whole Foods is doing, maybe Amazon doesn't even care about the name and just wants their retail locations, distribution system, and contracts. It could be rebranded and become a discount food store like Wal-Mart has.
 
#10
Whatever, if it can speed up and give a wider selection to Prime Pantry it's a good thing. Pantry is a good service but the choices are really lacking and the orders seem to take 2-3 days to arrive. With those private shippers like Lazership you might be able to order fresh ingredients.
 

ruckstande

Posts mostly from the shitter.
#11
I'm disappointed. I read they were in talks to buy BJ's Wholesale Club where we shop. I thought that would have been an improvement. It looks like that deal is done. Not sure how Amazon plans on selling to the masses while taking over Whole Foods with the hipster Millennial business model.
 
#12
I'm disappointed. I read they were in talks to buy BJ's Wholesale Club where we shop. I thought that would have been an improvement. It looks like that deal is done. Not sure how Amazon plans on selling to the masses while taking over Whole Foods with the hipster Millennial business model.
They can turn Whole Foods into their version of Fresh Direct.
 

JonBenetRamsey

well shit the bed
#13
Anyway, fuck that hipster store with its $8 a gallon organic milk. Anyone who thinks they're eating healthier by shopping only overpriced organic/GMO/gluten free is a rube and an asshole
As well as completely wrong, on top of being very anti-science. Though I'm sure they're pro science when it comes to the climate, not so much other things that conflict with their ideals. Kinda like religious people.
 

jnoble

Lingering longer for a longering linger
#14
Not sure how Whole Foods is doing, maybe Amazon doesn't even care about the name and just wants their retail locations, distribution system, and contracts. It could be rebranded and become a discount food store like Wal-Mart has.
Only if it wants to go out of business. Wholefoods entire business model is ludicrously overpriced food to soothe guilty white liberals and hipsters
 

NotSoFast

Registered User
#15
Unless you go WAY out into the wilderness for your food, there is no such thing as non-GMO food. Ever eat a tomato, including those from Whole Foods? GMO. The most organic ear of corn? GMO. These dummies don't realize that "GMO" doesn't necessarily mean using chemicals or radiation to alter a food. Just splicing orange tree branches to make another navel orange tree is considered genetically modifying.
 

Your_Moms_Box

Free Shit / Socialism 2016
#16
Unless you go WAY out into the wilderness for your food, there is no such thing as non-GMO food. Ever eat a tomato, including those from Whole Foods? GMO. The most organic ear of corn? GMO. These dummies don't realize that "GMO" doesn't necessarily mean using chemicals or radiation to alter a food. Just splicing orange tree branches to make another navel orange tree is considered genetically modifying.
EVERYTHING is a chemical.

Water is a chemical.

Oranges as a specied are a GMO splice of other fruits. Look it up. Oranges didn't exist before humans made them.
 

NotSoFast

Registered User
#17
EVERYTHING is a chemical.

Water is a chemical.

Oranges as a specied are a GMO splice of other fruits. Look it up. Oranges didn't exist before humans made them.
All corn is modified. Unmodified corn is inedible to humans without soaking in an acidic solution. The hippies think Monsanto invented modifying foods
 

mascan42

Registered User
#18
Because what Prime Pantry really needed was a reliable source of organic vegan mayonnaise.
 

Floyd1977

Registered User
#19
Unless you go WAY out into the wilderness for your food, there is no such thing as non-GMO food. Ever eat a tomato, including those from Whole Foods? GMO. The most organic ear of corn? GMO. These dummies don't realize that "GMO" doesn't necessarily mean using chemicals or radiation to alter a food. Just splicing orange tree branches to make another navel orange tree is considered genetically modifying.
Exactly, Genetic modification has been going on since the dawn of agriculture (fun fact, bullying predates agriculture). The corn on the cob we eat today doesn't "naturally" exist. "Real" corn is just a tiny little thing. Every banana you eat is a clone of all other bananas (and if one becomes susceptible to a fungus, they all get wiped out, like what happened to one of the two banana varies a few decades ago).
 

Mags

LDAR, bitch.
Donator
#20
All corn is modified. Unmodified corn is inedible to humans without soaking in an acidic solution. The hippies think Monsanto invented modifying foods
Corn is basically glorified grass.
 

Floyd1977

Registered User
#21
As well as completely wrong, on top of being very anti-science. Though I'm sure they're pro science when it comes to the climate, not so much other things that conflict with their ideals. Kinda like religious people.
I now fully consider liberalism just another religion. They have even deified Neil DeGrasse Tyson and Bill Nye the Mechanical Engineer

EVERYTHING is a chemical.

Water is a chemical.
It's always fun when people pull the only "Ban Dihydrogen Oxide" petition gag on dopes (It's fatal if consumed in large enough doses, it's fatal if inhaled, one of its primary uses is as a flame retardant, it accelerates rust etc,)

The worst though are the people who lose their minds just because a chemical has a scary sounding name or is also used in non foods. Remember when they all freaked because it was discovered that Subway bread had a chemical that was also used in gym mats (not that I would ever eat at a subway unless I was desperate since I live near several real delis)
 

NotSoFast

Registered User
#22
I now fully consider liberalism just another religion. They have even deified Neil DeGrasse Tyson and Bill Nye the Mechanical Engineer



It's always fun when people pull the only "Ban Dihydrogen Oxide" petition gag on dopes (It's fatal if consumed in large enough doses, it's fatal if inhaled, one of its primary uses is as a flame retardant, it accelerates rust etc,)
That reminds me of when Jay Leno, I think, was getting women to sign petitions to "end women's suffrage". Dummies.
 

Floyd1977

Registered User
#23
That reminds me of when Jay Leno, I think, was getting women to sign petitions to "end women's suffrage". Dummies.
Yeah I remember that, but I believe it was "The Man Show" (unless Leno did it too)
 
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