Deal Talk: Amazon Stays Mum, While Whole Foods Goes Off Script

Xavier Trudeau
Juin 26, 2017

GrubHub Inc. shares gained around 5 percent on Monday after an analyst suggested that the online and mobile food-ordering service could be the next buyout target of Amazon after its acquisition of Whole Foods Market Inc.

Amazon expects to change Whole Foods inventory to lower prices and make it more competitive with Wal-Mart Stores (WMT), said a Bloomberg report. "Whole Foods is our main competitor", said Bustamante.

The reason for the violent stock market reaction to the Amazon acquisition of Whole Foods is obvious: while the deal isn't final - it's possible other bidders will emerge - Amazon is clearly willing to make a bold move to get into the offline grocery business and when such a move is officially consumated, it will be highly disruptive. The proximity of many Whole Foods stores to existing Amazon locations could be one of the factors that attracted Amazon to the deal - making it easier to integrate its existing delivery infrastructure with its new retail presence.

The firm rates AMZN Overweight.

Nationwide, the retail grocery and supermarket business totaled almost $707 billion in revenue in 2016, according to U.S. Census data, and Amazon has made no secret of its intent to grab its share of that lucrative market. That is: How will the high-priced specialty and organic grocer's model fit in with Amazon's generally low-price focus and desire to be the "everything store"?

A recent AJP poll revealed most of our readers (39%) do not support Amazon entering the pharmacy arena in Australia. I think we could've talked for 10 hours.

"Every grocery store out there now is having a conversation about how much they can afford to spend to keep Amazon out of the space", said Brian Culpepper, a portfolio manager at James Advantage funds.

A Whole Foods Market purchase awaits placement in a auto trunk.

"From that, and depending on what they learn, we could see a strategy emerge in other realms, for example food manufacturing", she says.

Amazon has been longing for a piece of the action and despite the launch of AmazonFresh over a decade ago, it is an industry that Jeff Bezos has found hard to get into. I don't know if you know that- they were, like, ranked the number-one most innovative company in the entire world.

Albertsons Companies Inc., the nation's No. 2 grocery-chain behind Kroger Co., began talking to Whole Foods earlier this year, after activist investor Jana Partners LLC began a campaign in February urging Whole Foods to sell. But he said he thought Amazon would be able to help Whole Foods more quickly realize the changes it has already been pursuing, such as a loyalty program and its cost-cutting efforts.

"I think it helps their distribution network". "The Whole Foods Market stores and our brands, they're gonna stay all the quality standards we have, the integrity we have behind our products and our brand, those are gonna be intact".

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