Amazon, an American e-commerce company, announced on the 16th that it would buy whole foods, a high-end supermarket chain, for $13.7 billion, shaking retail territory. Wal Mart and other physical retail enterprises will be subject to greater competitive pressure.
It is reported that in the transaction, the price of $42 per share was 27% higher than the closing price of the supermarket chain the previous trading day. As of April 9, total foods had 318.9 million shares in circulation after the dilution, and the transaction was worth $13.39 billion after deducting debt.
Whole foods is known for selling high priced organic food, catering to affluent customers, and most of its outlets are located near Amazon customers' residences. Therefore, Amazon's purchase of whole foods can attract these customers to physical stores, which will help to strengthen the deficiencies of Amazon's fresh food delivery mode and reach customers in more ways.
Amazon said that after the acquisition, the supermarket will continue to operate as a whole food supermarket brand, remain as the company's original CEO, and the headquarters will remain in Texas. Amazon and whole foods expect the deal to be completed in the second half of 2017.
Affected by the trading event, the shares of physical retailers generally fell on the same day, Wal Mart fell 4.7%, and the shares of target, Walgreen boots and Costco fell by 5% to 7%. Supermarket chain Kroger plummeted 9.2%.
This is the biggest acquisition of Amazon since its establishment and is considered as an important step for Amazon to expand its offline business and physical retail channels. Market analysts believe that the acquisition will affect the direction of food retail and even the entire retail industry in the United States.
According to industry insiders, the acquisition of whole food supermarket makes Amazon expand its business map rapidly and win the popular American supermarket chain, which will solve the thorny logistics problem of purchasing and preserving fresh food for Amazon.
In the United States, Amazon is not the only company to develop fresh food distribution industry. Many start-up companies also cooperate with traditional physical supermarkets to launch similar services, such as instacart, fresh direct, Peapod, etc. Instacart, in particular, is often regarded as the strongest competitor of Amazon's fresh food business, and the main reason for its success is the strategic alliance with whole food. Buying whole foods could help marginalize instacart and further consolidate Amazon's position in the fresh food distribution market.