Amazon-Whole Foods Marriage Could Disrupt Grocery Business (NASDAQ:AMZN)

Saturday, 17 Jun, 2017

The deal is expected to close later in 2017 after approval by Whole Foods Market's shareholders, regulatory approvals, and other customary closing conditions. It had previously announced plans to open a 1,800-square-foot store called Amazon Go in Seattle, Washington.

Amazon, meanwhile, has been expanding its reach in goods, services, entertainment - and groceries.

"Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - they're doing an awesome job and we want that to continue", said Bezos in a statement. The company will continue to operate stores under its brand name and be run by co-founder and chief executive John Mackey, the companies said.

Food and retail stocks floundered on Friday (Jun 16) on news of Amazon's takeover of Whole Foods Market, but the Dow edged to a fresh record on gains in energy shares.

In Whole Foods, Amazon is acquiring a company that has recently come under pressure from investors for its lagging performance.

If some Whole Foods shareholders are miffed at Amazon launching a takeover bid, it is fair to say that shareholders of Whole Foods' rivals are even more annoyed, as the share prices of most food retailers took a battering on the news of Amazon's audacious move. Amazon has entered into a definitive merger agreement with Whole Foods over the acquisition though, so the sale is mostly a done deal.

Instinet analyst Anthony DiClemente said in a note quoted by CNBC that Amazon is going to disrupt grocery business. The e-commerce leader's stock popped another 4% on Friday, lifting its market value to an incredible $477 billion.

Texas-based Whole Foods Market is engaged in the business of natural and organic foods supermarket. Both companies said there will be no layoffs, but did not respond to other questions about Amazon's plans for Whole Foods.

Most Whole Foods locations in Canada are concentrated in the Greater Toronto Area and B.C.'s Lower Mainland.

The Whole Foods deal could also get more people to try grocery delivery, something many shoppers have been hesitant about because of concerns about meat and produce quality. But with the purchase of Whole Foods, the PrimeNow service from Amazon could drastically expand the catalog of products that are available for PrimeNow as well as cut down the shipping time by a considerable amount.

Kyle Bunch is with R/GA, a marketing, advertising and consulting firm right across from the Whole Foods headquarters.