Amazon buys supermarket chain Whole Foods Market

Amazon dealt a serious blow to Ahold Delhaize and Walmart: it acquired supermarket chain Whole Foods Market, its giant introduction to physical food retail. AD’s share was in freefall after the announcement, down 10 % after only an hour.

Largest purchase ever

Whole Foods Market has more than 460 stores and nearly 100,000 employees. It is specialized in organic products, but is still one of the thirty largest retailers in the United States, despite its niche market. The chain is also active in Canada and the United Kingdom.

Amazon will pay 13.7 billion dollars (12.5 billion euro), more than 1.5 times its stock value and the largest sum it ever paid for an acquisition. If Amazon can turn the Whole Foods stores into pick-up points and turn physical customers into online shoppers (even more), then it may have struck gold.

Not new, but …

Amazon is already present in the physical retail world (like with its book store chain), but this is its largest move outside of the online world, which immediately impacted its offline competitors: Ahold Delhaize’s share plummeted 10 %, Walmart dropped 5 % and Target’s share also tumbled.

Experts claim Amazon expressed an interest in Whole Foods last year, but the deal fell through at that time. Several short-term shareholders, like hedge fund Jana, wanted to cash out and Whole Foods Market’s board caved to the pressure from its shareholders.