Today, Amazon (AMZN) announced that they will be acquiring Whole Foods Markets (WFM) for approximately $14 billion or $42 per share.
Amazon has been in the grocery business for some time but dealt with non perishable items. The stumbling block that every potential “e-food” provider has been how to provide quick and fresh delivery for food that needs to be refrigerated. I wrote earlier about Walmarts plans to have their employees deliver items on their way too and from work.
Amazon, known for being willing to operate on minute profit margins in order to undercut competitors and put them out of business, could cause quite a bit of collateral damage with this one. They have been trying to perfect this idea of an automated supermarket with only a few employees to restock the shelves. If this is part of the Whole Foods buy, then there are going to be some jobs lost. With a curbside pick up, I’m sure some jobs may be regained there but it would seem to be a net loss.
What about food suppliers? Amazon pinches their supplier ruthlessly on price. That space has been under pressure as it is.
Some think there could be a competing bid for Whole Foods. Could there be a bidding war?
BJ’s Wholesale put themselves up for sale several months ago and Amazon was thought to be a suitor for them. Could a company like Walmart (WMT) make a competing bid for Whole Foods ? Could Walmart now pursue BJ’s?
Apparently, the online food business only accounts for 1-2% of the overall revenues but I would suspect that is about to change. I would suspect that a lot is about to change.
DISCLOSURE: This article was written for informational purposes only. It is not intended as investment advice and should not be relied upon as such. Consult with a qualified financial advisor or tax professional to determine the proper investment plan for you and your circumstances. I do not personally own or plan to purchase any investments spoken of here.