Amazon deal for Whole Foods could bring retail experiments

In an announcement that has jolted the shares of other grocers, Amazon will acquire Whole Foods for $42 per share, all-cash, at a value of approximately $13.7 billion.

Americans have been slowly moving toward online grocery shopping. The online retail giant recently launched a new store called 'Amazon Go.' Located in Seattle, the store replaces cashiers with technology you would normally find in self-driving cars.

News of the deal sent shares of traditional retailers such as Walmart, Target, Costco and Kroger tumbling as much as 13 per cent as investors tried to digest the implications of an Amazon-backed grocery chain. It was widely reported that Jana was pressing Whole Foods to consider a sale. "This deal has dramatically flipped the table on traditional companies".

On the flip side, Amazon could use Whole Foods stores as pickup locations for deliveries, an option Amazon already offers in many cities by installing lockers at 7-Eleven and other retailers. Then it uses sensors, computer vision, and deep-learning technology to track shoppers and what items they pick up.

Amazon will gain a footprint of 456 supermarket stores in North America and Britain with the acquisition of Whole Foods, boosting its delivery capacity and allowing it to compete directly with United States chains such as Kroger Co and Albertsons LLC.

Whole Grocer, which was founded in 1978, would continue to operate under its existing brand. The hedge fund held 26,074,830 shares purchased at an aggregate price of about $794.5 million as of May 27, 2017, a filing with the U.S. Securities and Exchange Commission showed.

"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. News of the deal took a bite out of stocks at competitors such as Walmart and Kroger. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw.

The deal will put fresh pressure on Walmart, which has been aggressively expanding its online business to win over consumers.

"Generally speaking, there is very little overlap between these two companies", said Michael Carrier, a Rutgers Law School professor who specializes in antitrust issues. But that's their real objective here so they can make a short-term profit.

When Amazon chose to approach Whole Foods last month, it picked Goldman for advice.

Belpointe Chief Strategist David Nelson told CNBC that the acquisition of Whole Foods will give Amazon.com, Inc.

The deal was Amazon's first valued at more than $1 billion, making it a coveted trophy for investment bankers in search of fees and glory.

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