Markets Right Now: Grocer stocks plunge on Whole Foods deal

Amazon buying Whole Foods for $13.7B

What the 'Amazon effect' could do to prices at Whole Foods

Amazon.com sent a shock wave through the grocery industry Friday when it announced plans to buy Whole Foods Markets and formally enter the world of bricks-and-mortar retail.

Once Amazon owns Whole Foods, it could introduce new perks at the grocer for Prime members, such as an express checkout lane, or Prime-member exclusive sales. But with the purchase of Whole Foods, the PrimeNow service from Amazon could drastically expand the catalog of products that are available for PrimeNow as well as cut down the shipping time by a considerable amount. Shares for Walmart, the largest US grocer, went down more than 6 percent, Target shares were down more than 10 percent and Costco shares were down more than 7 percent, USA Today reported. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw.

About a year ago, Amazon revealed plans for AmazonGo, a futuristic grocery store in which there are no check-out lanes.

Amazon (AMZN) has been dabbling in the grocery business with Amazon Fresh, a delivery service available in about 20 cities for a $14.99 monthly subscription. Groceries are already a fiercely competitive business, with low-priced rivals like Aldi putting pressure on traditional supermarket chains and another discounter, Lidl, opening its first US stores just this week.

The deal is expected to close later this year, with Amazon taking on Whole Foods' debt and paying $42 per share.

— Target. The retailer fell $2.85, or 5.1 percent, to $52.61. Jana had pushed to shake up Whole Foods' board of directors, among other changes. By enlisting Amazon, he gets to keep his job as CEO of the grocery chain. All of these are hints of what Amazon might bring to Whole Foods.

Share your thoughts - what was your reaction to Amazon's purchase of Whole Foods Market?

Paul Cautracecasas, the chief executive of Aquaa Partners, told The Washington Post that Amazon is "dominating all aspects of retail". Whole Foods is expensive AF, yes. "The consideration is significantly lower than at least one analyst's estimated value of $47.00 per share", noted The Briscoe Law Firm, as it called for disgruntled shareholders (both of them) to contact the firm to see whether Amazon could be compelled to pay more.

Combining the two companies will give Whole Foods not just a cash infusion but access to Amazon's massive distribution system. Amazon is also experimenting with a "click and collect" model that lets customers buy groceries online and pick them up at new AmazonFresh locations.

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