Whole Foods Market, which has more than 420 stores in more than 40 states in the US, soared more than 29.1 percent to $42.68.
Amazon.com, Inc., the world's largest Internet-based retailer, said Friday it will acquire Whole Foods Market Inc., a grocery store chain featuring foods without artificial preservatives, colors, flavors, sweeteners and hydrogenated fats, at a total cost estimated to be 13.7 billion US dollars.
Amazon's deal also gives it a brick-and-mortar footprint around the U.S. Shares of Whole Foods rose 29 percent, to $42.68, above Amazon's offered price.
"The conventional grocery store should feel threatened and incapable of responding", Wedbush Securities analyst Michael Pachter said.
Charlie O'Shea, a Moody's lead retail analyst, told the Associated Press news agency that the deal could be "transformative, not just for food retail, but for retail in general". On Friday, WalMart announced it is buying men's online clothing retailer Bonobos for $310 million. Until now, Amazon has largely focused its grocery efforts around its Amazon Fresh subscription service, which promises quick food delivery for online orders.
Whole Foods, a pioneer in organic products, as mentioned, started its business in 1978 in Austin, Texas, building its brand on healthy eating and fresh, local produce, though often with steep price points.
In Whole Foods, it is acquiring a company that has recently come under pressure from investors for its lagging performance. Whole Foods itself had launched an offshoot chain named after its "365" private label brand in a nod to the popularity of no-frills chains. The deal is expected to cover debts of Whole Foods Market. Kroger sank 11.48 percent, while Costco dropped 5.64 percent.
Initially an online bookstore as it was launched in 1994, Amazon stands now as the most valuable retailer in the United States by market capitalization, with more than 341,000 employees worldwide.
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"Amazon's brutal vision for retail is one where automation replaces good jobs".
Inside the stores, Whole Foods customers could see big changes, including easier checkouts.
Saunders suspects that Amazon will try to get food suppliers to lower their prices, impacting companies that both make and distribute food.
About 450: Number of Whole Foods stores across the country. Whole Foods shares were up just over 27% to the $US42.00 per share acquisition price.
"This might be an opportunity for consumers who have felt that Whole Foods is inaccessible", said Lauren Beitelspacher, a marketing professor at Babson College in MA.
Amazon says in a statement that it has "no plans to use the technology developed for Amazon Go to automate the jobs of cashiers at Whole Foods". "I think what they bought was a distribution network", Meyer said.
If Whole Foods took another offer, it would have to pay a $400 million break-up fee to Amazon, according to CNBC.
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