Amazon Is Buying Whole Foods on the Cheap

Whole Foods (WFM) shares spiked 27% to $42, Amazon’s offer price. The co-founder sees this deal as an opportunity that will boost value for Whole Foods Market’s shareholders.Jeff Bezos the chief executive of Amazon said that the company has taken a major step and for the company, the deal is a big move.”There is an inherent logic in the move which, in our view, brings benefits to both businesses”, Mr Saunders wrote, describing Amazon as a “white-knight” that has come to the grocer’s rescue.About a year ago, Amazon revealed plans for AmazonGo, a futuristic grocery store in which there are no check-out lanes. In it, customers are able to purchase various food goods using automated systems, meaning cashiers or checkouts aren’t needed.Amazon’s acquisition of Whole Foods is expected to finish by the end of this year.Online delivery of groceries so far has been tough for any company to pull off because of customers’ concerns about the quality of meat and produce, Wedbush Securities analyst Michael Pachter said. Whole Foods will keep operating stores under its name. Because we also can’t help spending what seems like billions at the Whole Foods, but without all the perks Amazon got for it.Walmart, which announced its own $310m deal to acquire the online clothing company Bonobos, slid 6%. (OK, not really, but it feels like that, doesn’t it?) Getting into the grocery business is not easy, but by scooping up ownership shares in Whole Foods, it bought the company’s logistic know-how. And while it looks like Amazon and Whole Foods will operate independently for now, the fact that Amazon now has financial control of more than 430 stores around the world is likely unsettling for many small retailers looking to break into the grocery delivery market.The takeover also makes Amazon an instant player in the grocery industry, which it has been eying for some time.And because customers can buy foods and bulk items like toilet paper from a single retailer, discount retailers such as Costco, Target and Walmart should feel threatened, too.When it raised $400 million in March, Instacart said it operated in 35 markets and had 135 partnerships with grocery retailers around the country. Whole Foods opened its first Lehigh Valley supermarket in late September at Hamilton Crossings shopping center.