Amazon to buy Whole Foods in $13.7bn deal
Amazon has agreed to buy Whole Foods Market for $42 per share in cash, in a deal valued at around $13.7bn.
Amazon.Com Inc.
$176.59
13:09 24/04/24
Food & Drug Retailers
3,798.88
17:09 24/04/24
FTSE 100
8,040.38
16:34 24/04/24
FTSE 350
4,419.71
17:09 24/04/24
FTSE All-Share
4,374.06
16:44 24/04/24
Nasdaq 100
17,526.80
12:15 24/04/24
Tesco
291.40p
16:40 24/04/24
Whole Foods Market Inc.
$41.99
19:30 26/03/19
Amazon founder and chief executive officer Jeff Bezos said: “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades - they’re doing an amazing job and we want that to continue.”
Meanwhile, Whole Foods co-founder and CEO John Mackey said: “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.”
As part of the deal, which is expected to close in the second half of this year, Whole Foods will continue to operate stores under its brand name and source from trusted vendors and partners around the world, with Mackey staying on as CEO and headquarters remaining in Austin, Texas.
Completion of the transaction is subject to approval by Whole Foods shareholders, regulatory approvals and other customary closing conditions.
Neil Wilson, senior market analyst at ETX Capital, said: "A big, big play by Amazon for Whole Foods in a deal worth $13.7bn that is leaving rivals quaking. This is a huge development for US retail, yet another signal of the seismic shift in the market caused by the Amazon model. Amazon looks set to dominate the food sector now just as much as it does non-food. Amazon brings incredible scale and pricing power that will make life a lot tougher for anyone else. But there are increasingly serious anti-trust concerns - how long until Washington takes note of what’s going on and clamps down?
"It’s caused carnage among retailers. Big US retailers are being smashed. Wal-Mart is down 6% and Target has shipped 10% on the announcement. Costco fell 8% and Kroger plunged 15%. It’s fair to say there will be crisis board meetings at these companies after this move. Amazon shares jumped 3% on the deal, although it remains shy of its all-time peak. Whole Foods has surged 27%."
Wilson added that UK supermarkets are also falling, with Tesco and Sainsbury’s and Morrisons all lower on the news.
"Whole Foods has just nine stores in the UK so the impact on Morrisons (which has its own tie-up with Amazon) should not be too significant, and if anything could support Morrisons if it signals how Amazon might be able to help it grow market share," Wilson added.
London Capital Group analyst Jasper Lawler said: "Tesco shares managed a spectacular 180 degree change in fortunes on Friday. Investors flipped from satisfaction at the highest profits in seven years to fears that Amazon could knock Tesco off its perch as Britain’s number one supermarket. Amazon’s $13.7bn purchase of US natural food store Whole Foods marks the entrance of a major new player into the supermarket space."
At 1544 BST, Amazon shares were up 3.4% to $996.80 while Whole Foods shares were up a whopping 27% to $41.94. Tesco shares, meanwhile, were down 5% at 171p.