Amazon to buy USA grocer for $13.7bn

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Shares of many grocers and retailers slumped Friday after Amazon announced a $14 billion deal to buy high-end grocery chain Whole Foods Market.

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.

Activist hedge fund Jana, led by Barry Rosenstein, disclosed a almost nine per cent stake in Whole Foods in April.

Inc. (NASDAQ:AMZN) has chose to buy Whole Foods Market Inc.

"We are always concerned when there is some loss of brick-and-mortar stores out there", Mullins said after just hearing of the news early Friday. (NASDAQ:WFM) in a deal valued at around $13.7 billion.

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To that end, Whole Foods supermarkets will continue to operate under their current brand, with their co-founder and CEO, John Mackey, talking about increasing shareholder value and the "innovation" the deal could bring to customers.

John Mackey will continue as chief executive of Whole Foods, and the company's headquarters will remain in Austin, Texas.

Amazon says both parties expect "to close the transaction during the second half of 2017".

Meanwhile, Whole Foods stock soared on the news, jumping 29 percent. At some of the Whole Foods 365 locations, the grocer's discounted brand, consumers can use iPads to order food or find a bottle of wine.

Moody's lead retail analyst Charlie O'Shea said the deal could be "transformative, not just for food retail, but for retail in general".

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Inside the stores, Whole Foods customers could see big changes, including easier checkouts. The Seattle-based company was recently granted a patent for technology that would block shoppers from comparing prices from their mobile devices while they're in stores.

AmazonFresh is already experimenting with a "click and collect" system: Shoppers buy groceries online, then pick them up in person.

Amazon could very well be thinking much bigger, perhaps utilizing Whole Foods down the line as a pharmaceuticals play as well.

For the first time ever online retail giant Amazon is entering the fresh food space and offering a brick-and-mortar experience. While the online retailer wants to spend struggling USA retail space, RBC Capital analyst William Kirk believes that such a deal does not warrant industry re-rating that it caused on Friday, June 16. It was widely reported that Jana was pressing Whole Foods to consider a sale. This is more than likely going to be a commonality between numerous large retailers that will have to adjust to the constantly changing wants of their customers, and will have to eventually provide some sort of online option to stand up to the competition. Whole Foods will keep operating stores under its name.

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