Inc. said Friday it agreed to buy Whole Foods Market Inc. for $13.7 billion in cash. The deal's announcement instantly sparked a selloff in the stocks of other major U.S. supermarket and big-box chains on expectations that Amazon would bring its low-price expertise and technology prowess to bear with Whole Foods, putting further downward pressure on prices in the already hyper-competitive $611-billion U.S. grocery industry. "This is an earthquake rattling through the grocery sector," Bankrate.com "We can only imagine the technology innovation that Amazon will bring to the purchasing experience for the consumer," he said. Amazon said it agreed to pay $42 a share for Austin, Texas-based Whole Foods, which operates 460 stores in the United States, Canada and the United Kingdom, including about 85 in California, its biggest market.
There are number of factors that motivate businesses to take over other businesses. These factors include innovation, integration, portfolio expansion, killing competition, talent or customer acquisition. The 5 most powerful tech companies (Microsoft, Google, Apple, Facebook and Amazon, hereinafter called the Big 5) have been at the forefront of making such acquisitions. They have strengthened their competitive position and have a combined market capitalisation of over $2.8 Tn. While comparison is odious, consider that the Indian GDP is around $2.3 Tn and one can imagine the value they have created.
In a recent episode of HBO's Silicon Valley, Richard, the show's protagonist startup founder, and Monica, one of his investors, stroll through the aisles of a bountiful grocery store that looks not unlike Whole Foods. "You do realize I am literally the only person in this grocery store actually buying stuff for myself?" Grown men and women grab items off a shelf, hunch forward to consult their smartphone apps, and repeat. The satirical message: This is the future Silicon Valley wants. Society is inching ever closer to Mike Judge's fictionalized universe, although, in the real-world version, all those delivery startups might get displaced by Amazon.
The Amazon-Whole Foods deal is expected to lead to lower prices and other changes across the industry. Amazon is buying Whole Foods Market for 13.7 billion dollars. We talk to shoppers about the deal. For anyone in the business of selling, supplying or hauling groceries: Things just got real. The online seller is bringing its firepower to a grocery industry plagued by razor-thin profit margins.
Amazon.com Inc.'s AMZN 0.30% year-old acquisition of Whole Foods is prompting the food industry to retool how it sells fresh food to consumers. The e-commerce giant agreed to buy Whole Foods Market Inc. last June for roughly $13.5 billion and closed the deal in August. Since then, Amazon has rolled out additional deals and delivery to Prime members. Companies, investors and analysts expect more changes as Amazon uses data capabilities to track what shoppers buy at the grocery chain and market to them. The deal has been "shaking up the food industry from top to bottom," said Angela Spivey, a food-and-beverage attorney at McGuireWoods LLP, who is advising clients on how to quickly change their packaging and marketing to sell at Amazon and Whole Foods.