Goldman advised Amazon.com Inc and Evercore advised Whole Foods Markets Inc on Amazon's $13.7 billion acquisition of Whole Foods that will see the USA organic grocery chain become part of the world's largest internet retailer.
The online giant has made no secret of its plans to be a physical retail giant, too, and it's already started doing grocery deliveries.
The convergence of retail and ecommerce accelerated with a blockbuster Friday when it was announced that Amazon would buy Whole Foods for $13.7 billion and Wal-Mart is snapping up ecommerce men's clothing company Bonobos for $310 million. Grocery Outlet has about 20 locations scattered throughout Southern California, and more are in the pipeline.
(NASDAQ:WFM) in a deal valued at around $13.7 billion.
With the Whole Foods acquisition, analysts anticipate that Amazon will be the third largest retail grocery, behind Wal-Mart and Kroger, by 2021.
Amazon could try to use automation and data analysis to draw more customers to stores while helping Whole Foods cut costs and perhaps prices. In fact, Whole Foods shares closed Friday at $42.68, or roughly 32 cents a share above Amazon's acquisition offer after factoring in two quarterly dividend payments. Whole Foods' online presence is tiny, estimated at just $100 million, and executed through its web partner grocer Instacart.
In December, Amazon opened a grocery store in Seattle with no checkout line.
Meanwhile, Whole Foods stock soared on the news, jumping almost 30 percent by mid-morning.
Shares in many of Amazon and Whole Foods' competitors were down in trading today, as investors contemplated the potential ramifications from the tie-up.
"They're doing an awesome job and we want that to continue", Amazon founder and CEO Jeff Bezos said. Whole Foods chief executive John Mackey would remain CEO after the purchase, and the company would keep its headquarters in Austin.
In Whole Foods, Amazon is acquiring a company that has recently come under pressure from investors for its lagging performance. It also means big changes are ahead for the grocery business.
The almost $14 billion deal is the largest purchase in Amazon's history.
The deal prompted a round of jokes on Twitter, with commentators poking fun at Amazon's drone and artificial intelligence technology and numerous riffs on prices at a store dubbed "Whole Paycheck".
Smith expects Amazon to gut the Instacart-Whole Foods partnership. The online grocery market is expected to grow to $100 billion by 2025, leaving $80 billion in market share up for grabs.
It has expanded from a book seller into a merchant of almost all consumer products, as well as producing videos.
Both Amazon and Whole Foods cater to younger consumers including millennials as well as the affluent. We spoke to food analyst David Portalatin of the NPD Group, a market research company.
Offering the most convenient shopping experience possible continues to drive the competition.