Amazon deal seen as disruptor of grocery business

Credit AP  RICHARD DREW					Traders William Mc Inerney, and Mark Muller confer Friday on the floor of the New York Stock Exchange

News that internet retailer Amazon is ponying up $13.7 billion to buy grocery chain Whole Foods has resulted in billions of dollars worth of stock value damage in the retail and food categories.

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 U.S. chains such as Kroger Co and Albertsons LLC. Shares of other grocery-selling chains like Kroger, Target, Sprouts Farmers and Costco experienced a dip after the announcement. The Seattle-based company already offers discounted Amazon Prime memberships for people receiving government assistance and is part of a pilot program to deliver groceries to food-stamp recipients.

"Whole Foods Market has been satisfying, delighting and nourishing customers for almost four decades, they're doing an fantastic job and we want that to continue", said Jeff Bezos, Amazon founder and chief executive officer, of the supermarket that was founded in Austin in 1978.

Amazon is buying Whole Foods in a stunning move that gives it hundreds of stores across the USA - a brand-new laboratory for radical retail experiments that could revolutionize the way people buy groceries.

Shoppers will continue to have access to Whole Foods through Instacart while the Amazon deal is going through the approval process, a source familiar with the partnerships told CNN Tech. The online retailer will pay $42 per share in an all-cash transaction that also includes the supermarket's debt. It has been stated that chief executive Jeff Bezos plans on keeping the extravagant brand image of Whole Foods, for providing premium fresh groceries, intact while slashing down the prices. The deal will grant Amazon with control over more than 400 stores, integrating the stores with technology.

The purchase in one fell swoop gives Amazon, which until now has operated nearly entirely on the internet, a big presence in the brick-and-mortar world on Main Street, with more than 450 stores in the US, Canada and Britain.

"I'm a little concerned that the culture might change, the Whole Foods culture, but I'm kind of excited to see what Amazon's going to do with the brand", Hiddeman said.

Whole Foods recently overhauled its board and redoubled cost-cutting efforts, seeking to change a high-price image that has tagged it with the nickname "Whole Paycheck".

June 16 A decision by Goldman Sachs Group Inc past year to move an investment banking veteran to Seattle, as well as Evercore Partners Inc's hiring of a top banker defending companies against activist investors, has paid off handsomely. Analysts say the Whole Foods footprint and distribution channel could theoretically make 5-minute deliveries a reality.

Amazon is a beast in the world of online retailers. Anderson advised Whole Foods alongside senior Evercore bankers Eduardo Mestre and William Hiltz. One day, these stores might even serve as launch centers for Amazon's delivery drones.

John Mackey will remain CEO of the company.

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