Seattle's Amazon makes news with planned buy out of Whole Foods Market chain for $13.7 billion
June 16, 2017
It's going to be bricks & mortar groceries for Amazon soon.
(SEATTLE, WA.) -- What exactly is it that Amazon's CEO Jeff Bezos knows about the grocery business that nobody else does, including the most experienced people in the industry?
First of all the grocery business is a brutal one to be in. Margins are small and shoppers will go somewhere else to save 25 cents on something.
Put a mild economic recession into that mix and things get even worse for the industry. Besides that, the industry as a whole hasn't exactly been setting the stock market on fire.
And yet there it is. The retail online giant Amazon.com making a huge entrance into the, the brick-and-mortar world Friday with the announcement that it would buy the Whole Foods Market chain (more tan 430 locations) in a deal valued at $13.7 billion.
In addition to the grocery business being a notoriously hard business to prosper big in, Whole Foods, according to the Washington Post, "Has recently come under pressure from investors for its lagging performance...(the company) has found it difficult to attract more mainstream consumers as Walmart and other large chains have stepped up their sales of natural and organic products."
The deal is expected to close in the second half of this year, pending shareholder and regulatory agency approvals.
The plan is for Whole Foods chief executive John Mackey to stay on as CEO after the purchase with the company keeping its headquarters in Austin.
“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,” Mackey said in a statement.
Amazon's founder and CEO Jeff Bezos said, "Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades - they're doing an amazing job and we want that to continue."