Amazon acquires huge grocery store chain

Ashley Carr
June 23, 2017

Online retailer Amazon is expanding its footprint into Newark after announcing it was merging with Whole Foods Market, Inc in an all-cash deal valued at $13.7 billion.

After the announcement, Amazon's shares went up more than two percent and Whole Foods Market shares went up by about 28%.

The Amazon-Whole Foods combination could put even more pressure on rival grocery chains and other big grocery sellers. As more and more grocery stores have begun offering organic produce, Whole Foods is no longer people's only option.

The Amazon-Whole Foods transaction is expected to close in the second half of 2017 following regulatory approvals and a vote by Whole Foods shareholders.

Amazon announced Friday that it will pay $42 a share for Whole Foods, which was founded in 1978 in Austin, Texas, and is still based there.

Amazon has experimented with the occasional pilot bookstore or grocery store in the past.

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Amazon's acquisition of Whole Foods Market is sending the stocks of grocery store operators and other companies that compete with Whole Foods plunging.

The purchase in one fell swoop gives Amazon, which until now has operated nearly entirely on the internet, a big presence in the brick-and-mortar world on Main Street, with more than 450 stores in the US, Canada and Britain. Firstly, don't forget that Whole Foods is a pretty trendy and high-end outlet with an organic focus.

In the United Kingdom, where there are Whole Foods stores, sell-offs wiped out almost $2billion (£1.5billion) from the value of stocks at grocers Tesco, Sainsbury's and Marks & Spencer, according to This Is Money. Mr Bezos is known for making unconventional decisions and having big ambitions, and this could mean a more frontal assault on Walmart - a face-off between the old and the new dominant forces in the retail world.

How quickly items get delivered "is going to have to be improved considerably" for customers to order something online instead of going to the prepared-foods counter at the supermarket, she said. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods. This will help Whole Foods have an online delivery presence.

"The quality will give to provide a cheaper price to consumers", said Whole Foods Shopper Hamid Fhehollahi. While it's competitor Wal-Mart has announced a United States dollars 3.3 Billion for previous year and UD 310 Million for internet apparel retailer Bonobos, Amazon wanted its customers to visit the store physically to but fruits, vegetables and meat. "Everybody's been kind of joking that it's going to be robots and drones", Clark said of potential changes from Amazon, which uses robots in its warehouses and is testing drones for delivery. It was recently granted a patent for technology that would block shoppers from comparing prices using their mobile devices while they are in stores. CEO John Mackey will also retain his job.

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