Amazon to buy Whole Foods for $13.7 billion

Online retailer Amazon is expanding its footprint into Newark after announcing it was merging with Whole Foods Market, Inc in an all-cash deal valued at $13.7 billion.

Amazon sent shockwaves through the business community Friday when it announced its purchase of supermarket chain Whole Foods.

"Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades, they're doing an awesome job and we want that to continue", said Jeff Bezos, Amazon founder and chief executive officer, of the supermarket that was founded in Austin in 1978.

Whole Foods, which has built a following that buys its organic meats, produce and other items, is in a strong position to persuade shoppers to place orders online and let store employees do customers' marketing for them, he said.

The deal still needs to gain regulatory approvals and is subject to a Whole Foods shareholders vote.

Amazon is buying Whole Foods Market, for $42 per share in a deal that values the grocery outlet at $US13.7 billion.

Neil Saunders, managing director of the research firm Global Data Retail, said Amazon is likely to push supermarkets and grocery stores to lower prices, which will affect the companies that make and distribute those products.

Amazon's acquisition of Whole Foods Market is sending the stocks of grocery store operators and other companies that compete with Whole Foods plunging.

Amazon also has been testing automation technology at a Seattle convenience store that's now open only to Amazon employees.

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Whole Foods, often derided as "Whole Paycheck" for its high prices, could see its reputation change if Amazon, a master at undercutting its brick-and-mortar rivals, passes any savings from automation to customers.

Following Amazon's move to plant a bigger stake in the food-selling business, shares of Walmart tumbled 4.6%, making it the biggest loser in the blue-chip Dow Jones industrial average. Whole Foods will keep operating stores under its name.

"This is an natural disaster rattling through the grocery sector as well as the retail world", said Mark Hamrick, senior economic analyst for Bankrate.com. According to multiple reports, Whole Foods also invested in Instacart.

Feinberg also says that Amazon has a test store called Amazon Go in Seattle that is displaying how Amazon does groceries.

Whole Foods, founded in 1978, saw its stock peak in 2013 at $65.24.

"I don't know if they do deliveries", she said, referring to Whole Foods.

Whole Foods will use "Amazon's superior inventory management, delivery management, better management of the customer database, and speed of service to checkout".

June 16 A decision by Goldman Sachs Group Inc a year ago to move an investment banking veteran to Seattle, as well as Evercore Partners Inc's hiring of a top banker defending companies against activist investors, has paid off handsomely. "Everybody's been kind of joking that it's going to be robots and drones", Clark said of potential changes from Amazon, which uses robots in its warehouses and is testing drones for delivery. CEO John Mackey will also retain his job.

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