Amazon.com to acquire Whole Foods at US$42 per share

A Wall Street sign near the New York

As Amazon moves into the grocery business with its $13.7 billion purchase of Whole Foods Market, the online retailer might meet resistance from some dedicated shoppers reluctant to buy food on the internet. Investors are likely anxious that Amazon, once entrenched in the physical grocery store business, will ruthlessly cut prices for food products like it did with books.

The deal would give Amazon control of 430-plus U.S. Whole Foods stores, almost all of which are in neighborhoods more affluent and younger than America as a whole, noted David Portalatin, the NPD Group's vice president of food industry analysis.

The deal could be "transformative", Moody's lead retail analyst Charlie O'Shea said, "not just for food retail, but for retail in general". While Amazon has been building more and more delivery hubs, the Whole Foods deal gives it 456 stores that it can instantly fit into that network, said Josh Olson, analyst with Edward Jones.

Some also speculated that a European grocery conglomerate could come knocking on Whole Foods' door, though Amazon's growing power would make it a formidable competitor to take on.

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

Well, we certainly weren't expecting to hear this morning that Amazon plans to acquire Whole Foods for $13.7B. It also had announced a board shake-up and cost-cutting plan amid pressure from activist investor Jana Partners. Whole Foods is courting the discount shopper with its lower cost brand 365.

The Amazon.com Inc. (NASDAQ: AMZN) deal to buy Whole Foods Market Inc.

Here's a look at shares of Amazon and Whole Foods over the past year. It's easy to imagine that Amazon might later decide to integrate this technology from its warehouses to its Amazon Go shops, and probably Whole Foods stores, too. In order for Amazon to get the volume growth they are looking for, fresh foods has to be part of the equation.

Whole Foods, which will keep operating stores under its name, said in an email to customers, that it will maintain the same standards under Amazon, including bans on artificial flavors and colors and antibiotics in hens producing its eggs.

John Mackey will remain CEO of the company. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer".

"This might be an opportunity for consumers who have felt that Whole Foods is inaccessible", said Lauren Beitelspacher, a marketing professor at Babson College in MA.

TARRANT: As Amazon get this ramped up and pushed out, I think we'll see a lot of brick-and-mortar supermarkets closing doors in the next four to five years not unlike we're seeing in traditional retail.

Ryne Misso of the research firm Market Track said a customer who buys fresh fruit regularly at Whole Foods might be offered a deal on blenders and serving bowls. But if customers know that what they are getting is the same as what they'd get at the local store, they are more likely to try it out.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand. Tonight, 1 in 10 entrees served in Americans' homes will be a "prepared, ready-to-eat" item purchased outside the home. The stores could also showcase gadgets such as Kindle e-readers and Fire tablets.

It's not yet clear how its drone delivery program or Prime one-day delivery could change Whole Foods.

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