Amazon's bombshell buyout of Whole Foods could change the grocery industry

Some speculated that the stock rose above $42 in anticipation that another buyer could emerge to challenge Amazon, potentially kicking off a bidding war for the 37-year-old grocery chain. And it shakes up a US grocery industry that has been struggling to keep up with growing competition, both in stores and online. The website cited an opportunity for the company to buy another entity with the logistics expertise to fill that said gap.

A crowded local grocery market became more interesting - and probably more competitive - as online retail powerhouse Amazon announced Friday that it will buy organic foods specialist Whole Foods, which now has stores in Washington Twp., Mason and Cincinnati. This is by far the largest acquisition Amazon has ever made. The company has built other physical retail locations for books.

The acquisition is seen as a move by Amazon to more aggressively target the grocery section of retail has proven more stubbornly resistant to digital channels.

Shares of the grocer were trading at $US33.06 a share before the deal was announced, so the deal represents a 27% premium on its closing price yesterday.

Whole Foods had been under pressure from activist hedge fund Jana Partners LLC prior to the announcement of Friday's deal, prompting it to overhaul its board of directors.

Set up in 1978, Whole Foods, whose stores now span more than 430 locations, has found it hard to attract more mainstream consumers as Walmart and other large chains have stepped up their sales of natural and organic products.

"We believe it presents an incredible opportunity to take Whole Foods Market's mission and goal to new levels and will create significant value for our stakeholders - including you, our most loyal customers".

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Businesses being in competition is always great for the consumer. On Friday, WalMart announced it is buying men's online clothing retailer Bonobos for $310 million. The transaction is expected to close during the second half of 2017.

"Generally speaking, there is very little overlap between these two companies", said Michael Carrier, a Rutgers Law School professor who specializes in antitrust issues.

"They really want to be communicated with the way they want to be communicated with", Hauptman said.

According to a report by Washington Post, news of the deal sent shares of rival grocers plummeting, thanks to the prospect of an Amazon-backed grocery chain.

Amazon, which is sitting on $21.5 billion in cash, has long eschewed big acquisitions.

While the news came as a surprise to most observers in both the technology and retail sectors today, it is apparently a move Amazon has been contemplating since at least last fall, when it first considered acquiring the organic food company.

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