E-retailer Amazon’s latest deal has sent shock waves through major grocery brands. On Friday, June 16, Amazon bought Whole Foods Market Inc. in a definitive merger worth $13.7 billion. The acquisition was an all-cash transaction in which Amazon bought Whole Foods Market for $42 per share price. The net price included the Grocery Chain’s net debt as well. The transaction is expected to close in the second half of 2017.
The deal has impacted other retailers such as Kroger, Costco, and Walmart and resulted in their share prices going down. Walmart’s share prices went down by 4.7 percent on Friday, while Costco’s shares decreased by 7.2 percent to $167.11. Kroger’s stock went down by 9.2 percent.
The price that Amazon is paying Whole Foods is ten times more than what the online shopping website spent in 2009 while buying Zappos, the online shoe retailer. With this purchase, the e-retailer has instantly established its footprint in the 460 brick-and-mortar high-end grocery stores that Whole Foods Market owned all over the United States and also in the UK and Canada.
Amazon enters grocery business
The company’s founder Jeff Bezos said that the reason the retailer chose to acquire Whole Foods was because of the grocery chain’s immense popularity among people thanks to its natural and organic products. He added that Whole Foods had been doing a wonderful job for the last 40 years and Amazon would like to continue doing so after the acquisition. Bezos can be right as the grocery chain does have the potential to outdo rival Walmart, the world’s largest retailer, who has been dominating the grocery market and has also stepped-up its online retail section.
John Mackey, the founder and CEO of Whole Foods Market, stated that the merger with the e-retailer was an opportunity for the grocery chain to maximize its share values.
However, he also assured that the acquisition in no way would undermine the quality of the products, and the experience that the consumers have been enjoying till date. Mackey said that the buyers will experience the same innovation and convenience if not better even after the deal with the e-commerce giant.
A brief history of the grocery chain
Whole Foods Market, founded in 1978 in Austin, Texas has been a popular name in all households courtesy the natural and organic food items that the grocery chain offered. The company was the first national grocer to get the “Certified Organic” certificate. Even after the merger, it will continue operations under the same name all around the world, as this is the name consumers, vendors, as well as partners globally have grown to know and trust. Apart from that , Mackey will continue to serve as the CEO and the organization will also continue to operate from its headquarters in Texas.