Whole Food Shares Keep Rising, Leading to Bidding War Speculation

Terrell Bush
June 20, 2017

Amazon is once again shaking up the retail sector, with the announcement Friday it will acquire upscale United States grocer Whole Foods Market, known for its pricey organic options, in a deal that underscores the online giant's growing influence in the economy.

Ocado shares raced ahead on Monday after investors cheered the prospect of the online grocer striking a partnership deal with Amazon following the retail giant's swoop for USA grocer Whole Foods.

Notably, shares of dozens of supermarkets, food producers, shopping malls and payment processors collectively lost about $35 billion in the USA market on Friday in response to the news.

Amazon, Maute noted, has already dipped its toe into brick-and-mortar retailing with the likes of its Amazon Books bookstores and ongoing experiments with small-format grocery stores.

Those big-box competitors already were disadvantaged by Amazon's captive audience, an estimated 80 million Prime members, who theoretically could order groceries online or task Alexa, Amazon's virtual assistant, to prepare a delivery or arrange for a pickup at the nearest Whole Foods.

There's no denying that Amazon's (AMZN) acquisition of Whole Foods (WFM) could have a significant impact on grocers' margins and result in store closures.

"Retail presence is very important for e-commerce websites like Amazon", Elspeth Cheung, global BrandZ valuation director at Kantar Millward Brown, told ConfectioneryNews.

Say "Whole Foods" and some envision a gastronomic nirvana, overflowing with a healthy bounty worth a premium price.

Using computer vision, sensor fusion, and deep learning, the Amazon Go beta technology can automatically detect when you take something off the shelf and charge it to your Amazon account. Meanwhile, Whole Foods shares closed on Friday almost 2 percent above the agreed price, implying some investors think a rival bid could emerge.

It's no secret that Whole Foods has struggled with its expensive image, aptly captured in its "Whole Paycheck" nickname.

Elise Bauer, a food blogger in Sacramento, California, lives about five minutes from a Whole Foods store and shops there several times a week. And buying Whole Foods would give Chief Executive Officer Jeff Bezos a ready-made cadre of customers. Food and CPG manufacturers will now need to work more closely with Amazon and leverage their assets, including product innovation, sales/marketing, loyal customers, owned media, etc., and partner with all retailers in their initiatives to drive compelling shopping experience.

"Every grocery store out there now is having a conversation about how much they can afford to spend to keep Amazon out of the space", said Brian Culpepper, a portfolio manager at James Advantage funds.

Will Amazon use the 365 brand as a focal point of its online food offering?

Does Amazon stock depend on Whole Foods? They can (bring) pricing pressure.

Concerned Whole Foods shareholders who would like more information about their rights and potential remedies, including those who believe that the proposed transaction is unfair as to price or terms, may contact attorneys Amber Eck or Kathleen Herkenhoff at 619-342-8000, ambere@haelaw.com or kathleenh@haelaw.com.

The Whole Foods deal could also get more people to try grocery delivery, something many shoppers have been hesitant about because of concerns about meat and produce quality.

Other reports by TheDigitalNewspaper

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