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17 Junio 2017, 03:58 | Benedicto Grullon
(NASDAQ:WFM) stock soared Friday after news broke that the organic grocer would be acquired by Amazon.com (NASDAQ:AMZN) for $42 per share, or $13.7 billion. That comes out to about $42 a share.
In a press release announcing the deal, Amazon CEO Jeff Bezos said, "Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades - they're doing an wonderful job and we want that to continue".
"Just heard that Amazon bought Whole Foods!" one commenter wrote on Whole Foods' Facebook page.
While Whole Foods' Canadian store count is relatively paltry in comparison to the big players, strategy advisor Mark Satov of Satov Consultants thinks it's inadvisable to sleep on the ambitions of Amazon Chief Executive Officer Jeff Bezos.
"[The supermarket industry] is glacially slow". In the last 65 years or so, the only really major change is products.
Speaking to that control, Barry C. Lynn, director of the Open Markets Program at New America, stated Friday that the "private corporation already dominates every corner of online commerce, and uses its power to set terms and prices for numerous most important products Americans buy or sell to one another".
But Amazon has been trying to conquer the grocery business for about a decade, with little to show for it. Amazon's biggest rival, Walmart, has built a thriving grocery business, while startup Instacart has partnered with conventional grocery stores to enable same-day delivery. But when you look at the size of the market there's still huge opportunity. The folks at Amazon are long-term thinkers. Amazon has completely revolutionized American retail, and they have been running this pilot project - Amazon supermarkets - that they've been testing with their own employees for the past year or so. Those standards are core to Whole Foods Market and we will remain committed to them.
Let's be clear: The main reason to do this deal is because Amazon has been struggling to crack the $800 billion grocery market in the US for going on a decade. Customers are charged for these products electronically as they take them off of the shelves.
High prices, of course, have been a problem for Whole Foods.
This handheld device could ultimately be used to purchase goods from your local Whole Foods.
Whole Foods' stock soared 27 percent.
Whole Foods has 13 Canadian locations, which are mostly in the Greater Toronto Area and B.C.'s Lower Mainland.
Brancaccio: Those activist investors could stand to gain with this bulletin here this morning, right? That may be one reason why Whole Foods was willing to sell to Amazon. And that results in bigger profits.
"When Amazon is serious, frankly, there is no limit to what they can do in terms of disrupting the space. essentially relegating everything that now exists in the business obsolete", said David Tawil, president of hedge fund Maglan Capital.
In the past few years, Amazon has been testing perishable grocery delivery to its Prime subcription members. Amazon might be able to sell low-priced groceries as it makes its money from its online marketplace, and do to big grocery stores what it's done to many other retailers.
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Amazon to buy Whole Foods for $13.7 billion
In April, activist investor Jana Partners called the firm's shares undervalued, noting "chronic underperformance". Activist hedge fund Jana, led by Barry Rosenstein, disclosed a almost 9 percent stake in Whole Foods in April.
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