Amazon Purchase Of Whole Foods Could Have Huge Effects On Grocery Industry
Jeff Bezos and Amazon announced today they intend to purchase Whole Foods for $42 per share, or roughly $13.7 billion. The announcement sent share prices of Whole Foods stock upwards while sending the prices of other companies in the industry downhill.
Shares of Whole Foods Market inc, the parent company of Whole Foods, closed at $33.06 on Thursday June 15. Those same shares were sitting at $43.06 and 2:30 PM EDT on Friday, June 16, an increase of about 30%. Amazon’s $42 per share offer represents a 27 percent premium to Thursday’s closing cost.
The announcement brought uncertainty to other grocery retailers as well as the makers of products that line the shelves in those stores. Walmart reportedly lost $15 billion in market value Friday morning as its stock dropped 6%. Target (10%) and Kroger (14%) were among the other grocers whose stock took a hit Friday morning.
Investor fears that Amazon will force suppliers to drop prices, like it has done in many other industries, led to the food companies losing market value as well.
Hershey closed at $114.89 on Thursday. By Friday at midday, the stock was had sunk to $110.91 before rebounding slightly.
Amazon’s purchase of Whole Foods will easily be its biggest purchase in the history of the company. In 2014, the online shopping giant bought video game streaming service Twitch for $970 million, its largest acquisition to date. Amazon’s purchase of Zappos was thought to have been valued at $940 million, although some outlets have reported a value up to $1.3 billion.
No matter which number you believe, this Whole Foods deal is massive.
Amazon has famously been working to get into the grocery market for the last decade. But as The Verge points out, this deal has implications that extand far beyong groceries.
By buying Whole Foods, Amazon can use its hundreds of stores for things like distribution centers, storage lockers and more. USA TODAY used their imagination to come up with a whole list of ways Whole Foods could change under Amazon.
Whole Foods currently operates three stores in the St. Louis area, including its Central West End location at the corner for North Euclid Avenue and West Pine Boulevard. That building was developed by Mills Properties and features The Orion luxury apartments on the upper floors.
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