Bus 1050 - Amazon Is Buying Whole Foods for $13.7 Billion

Cheyenne Yokeley

Dr. Stolberg

BUS 1050 – 101

19 September 2018

Whole Foods

     Whole Foods was founded in 1978 and is the largest grocery store chain to specialize in natural and organic foods in the United States of America. Also, Whole Foods is the grocery store who is widely credited with helping make organic food go mainstream. The company has been aggressive with moving into big cities in the United States and expanding into other countries. In 2017, the online retail giant better known as Amazon decided its next big step was to bet on physical stores and the food business involving Whole Foods (“Amazon”).

     Amazon went through with this merger by buying the organic grocery store chain for $13.7 billion in cash. While this deal values Whole Foods at forty-two dollars a share which is twenty-seven percent higher than the stock was before Amazon bought the chain. The fact that Whole Foods is such a well known grocery store chain caused Amazon to make the executive decision of keeping their original name while having them run as a separate unit from Amazon. They also decided that Whole Foods would be ran by their CEO John Mackey and keep their headquarters in Austin, Texas (“Amazon”).

     The merger between Amazon and Whole Foods shows Amazon’s interest in becoming more a part of the traditional way of operating a business. Also, it shows how Amazon’s interest in groceries is growing. Amazon already had its own groceries delivery service called AmazonFresh. This service model was designed so that customers shopped online and only had to pick up the groceries in person. Lastly, the deal between Amazon and Whole Foods further shows the financial might of this company (“Amazon”).

     Amazon has hit all types of retail markets hard, but with the buying of Whole Foods and getting into having groceries on their own website they have added a great deal of competition in the grocery store world. After the initial merger, Kroger’s stock plummeted almost thirty-three percent. Places such as Target, Costco, and other retail stores with a big presence in groceries watched their stocks plunged as well. Also, Walmart’s stocks went down by five percent even though they announced an online commerce deal of their own. As everyone’s stocks plummeted, Amazon’s stocks rose by three percent just by the news of merging with Whole Foods (“Amazon”).