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Published: Sun, June 18, 2017
Global Media | By Abel Hampton

Amazon buying Whole Foods in bold move into brick and mortar

Amazon buying Whole Foods in bold move into brick and mortar

Amazon is buying Whole Foods, in a merger that values Whole Foods stock at $42 a share - a premium over the price of around $33 at the close of trading on Thursday.

Excluding debt, the deal is valued at $13.39 billion, based on 318.9 million diluted shares outstanding as of April 9.

Whole Foods' headquarters will remain in Austin, the company said, and longtime CEO and co-founder John Mackey will continue running the company. The deal is worth $13.7 billion United States dollars and is expected to close the 2nd half of this year.

Amazon and Whole Foods did not disclose details of how their partnership would evolve, but the deal could provide one avenue for Amazon to expand food sales. This move could also give Whole Foods room to make necessary investments in technology and infrastructure.

The deal unites the online juggernaut with the grocery store chain that fell behind as the organic and natural foods it helped popularize expanded to more locations and shoppers found "good enough" alternatives.

Wal-Mart in the meantime has been growing its e-commerce business with an eye on Amazon, and operates more than 4,000 US stores. Customers order online and the items are picked from the store closest to the address and delivered.

Whole Foods has been under pressure from hedge fund Jana Partners, which owns an 8 percent stake, to sell itself.

In Whole Foods, it is acquiring a company that has recently come under pressure from investors for its lagging performance. Industry observers in the meantime had argued Whole Foods would be better off as a private company. It also had announced a board shake-up and cost-cutting plan amid pressure from activist investor Jana Partners. Walmart has touted synergy between physical and virtual retailing capabilities - particularly in food - as a competitive advantage.

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