Amazon buying Whole Foods, making strong move into groceries

In a dramatic move that promises to shake up the grocery industry, Amazon on Friday announced that it will buy Whole Foods in a $13.7 billion deal.

Whole Foods will keep operating stores under its name and John Mackey will as CEO, with headquarters in Austin, Texas.

"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy", Bezos said.

Last year, it opened Amazon Go, a checkout-free grocery store in Seattle, where customers are charged on their Amazon accounts for the products they leave the store with without ever having to see a cashier or self-checkout system.

Still, mergers of this size rarely instill confidence within the same sphere of stockholders. However, the company has now chose to take the plunge by acquiring Whole Foods Market in a deal that dwarves all the previous deals that the company has completed. Because Amazon doesn't mind losing money, it's something of a unique threat to grocery stores, food producers and other kinds of retailers. Amazon also offers grocery shipments elsewhere, but that's tough with perishable foods. From amusing observations to skeptical outlooks, here's what Twitter users have to say on the matter.

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Reaction to the deal on Wall Street was murder on some public grocery stocks like Kroger (down more than 10%), Smart & Final (down 16%), Supervalu (down 13%), United Natural Foods (down 8%), Sprouts Farmers Markets (down 8%) and Wal-Mart Stores (down 5%). Costco took its biggest loss in nearly six years as it sank $12.95, or 7.2 percent, to $167.11. The deal is expected to close in the second half of 2017 pending regulatory approval, the company said in a news release Friday. "Amazon shares were up 2.8 percent at $991.35 and Whole Foods shares were up 28.6 percent at $42.51 in afternoon trading".

Whole Foods has been struggling the past few years as more grocers have moved into the specialty foods market, with Kroger's Main & Vine in Gig Harbor (the chain's only one in the United States) being the most prominent local example.

Amazon, meanwhile, has been expanding its reach in goods, services, entertainment - and groceries.

"Supermarkets will now have to contend with not only competition with each other and non-traditional grocers like Wal-Mart Stores Inc and Target Corp, but with a retailer like Amazon which has the financial capacity to price aggressively", said Mickey Chadha, vice president and senior credit officer at Moody's Investors Service. "We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer". Like Prime, Whole Foods' base contains an outsized share of USA consumers earning over $100,000 per year, and also skews towards well-to-do urban and suburban neighborhoods. "What Amazon gets from this acquisition are three assets - data, a large retail physical footprint and the Whole Foods brand, in that order of importance".

The activist hedge fund that took a stake in Whole Foods back in April with plans to push for a sale just cleared a tidy profit. Amazon climbed $34.62, or 3.6 percent, to $998.79, its biggest gain of the year.

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