Amazon.com to acquire Whole Foods at US$42 per share

Amazon to buy Whole Foods Market in deal valued at $13.7 billion

A Moody's analyst described the Amazon-Whole Foods deal as a "transformative transaction, not just for food retail, but for retail in general".

Amazon is buying Whole Foods for $13.7 billion, and that could be bad news for Instacart.

SuperValu, which has a network of 2,000 grocery stores across the country, took one of the biggest hits.

But Whole Foods, which has been feeling the heat to bolster its stock for more than a year, has a new owner with cash to burn, significant technological expertise, and a willingness to invest aggressively in a quest for dominance of a brand new sector.

"This is an quake rattling through the grocery sector as well as the retail world", said Mark Hamrick, senior economic analyst for Bankrate.com.

On the Dow, Wal-Mart shares dropped 4.7 percent, while Target, Walgreen Boots and Costco shares fell between 5 percent and 7 percent, according to Reuters.

SELYUKH: Outside the Whole Foods in Northeast Washington, the shoppers were broadly pleased with the news - two trusted brands coming together, presumably planning to offer something high-quality and convenient - but then a big-picture step back from Sam Bernstein.

Amazon Go doesn't employ robots to stock shelves - at least not yet.

"This partnership presents an opportunity to maximize value for Whole Foods Market's shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers", said John Mackey, Whole Foods Market co-founder and CEO.

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Acquiring Whole Foods will provide Amazon more physical locations to experiment with, and eventually expand its retail business. We spoke to food analyst David Portalatin of the NPD Group, a market research company.

PCC has also partnered with its competitor, offering delivery through Amazon Prime Now since April previous year.

Grocery stores, which have low profit margins, have also been competing more intensely when it comes to price.

Several have, however rebuked the over-priced "extravagant" reputation of the organic supermarket chain as not being in line with Amazon's vision.

"It potentially turns these brick and mortar stores into distribution centers", Olson said.

Other stores are testing out tech-savvy approaches.

Customers who visit the store use an accompanied app that enables them to pick any item of their choice, and walk out without stopping at the cashier section. State Street and Fidelity both have a substantial amount of shares in Whole Foods, as BBJ reported. These tech solutions are likely to become more common this year, according to the JLL report.

The deal proves Amazon's increasing interest in moving into operating traditional brick-and-mortar stores and its growing focus on groceries.

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