Other deals could follow the Amazon-Whole Foods announcement, with Credit Suisse analysts saying that mergers represent "the path to survival".
Online grocery delivery can be notoriously hard, especially when it comes to the timely delivery of perishable goods, so here are five ways the purchase of Whole Foods will give Amazon an edge in this fight. She raised her price target on the company to $48 - almost 15 percent higher than Amazon's bid. Amazon buying Austin-based grocery chain Whole Foods for $13.7 billion certainly falls into the latter category.
Milstein Properties' Michael Milstein, whose company has Whole Foods as a tenant at 1551 Third Avenue, said he sees three likely motivations for Amazon's deal, with the company possibly looking to implement one or some combination of the three. Summary Amazon trades at 2.8x EV/revenue and 24.7x EV/EBITDA on the firm's published 2017 estimates. "He'll be very careful tinkering with anything that could hurt the value of the brand". The technology lets people pay with smartphones without seeing a cashier or going to a checkout kiosk, which would help Amazon differentiate itself in the brick-and-mortar setting and reduce labor costs at Whole Foods stores. "ORCRP016487-topic.html" class="local_link" >Wal-Mart Stores Inc. I think you're gonna see Whole Foods Market evolve in leaps and bounds. Amazon did not respond to a request for comment. Whole Foods also declined to comment. It has four "365 by Whole Foods Market" stores that are cheaper to build and operate than a traditional location and offer lower-priced items aimed at younger shoppers.
But Whole Foods has struggled in recent years, and the $33.06 price was about half where Whole Foods stock was trading at its peak in October 2013. Rumors already have Amazon making drastic changes to the store's format, now focused on organic groceries and prepared goods.
Amazon has been longing for a piece of the action and despite the launch of AmazonFresh over a decade ago, it is an industry that Jeff Bezos has found hard to get into.
"Grubhub is the nation's leading online and mobile food-ordering company, and we're focused on innovating to make it easy for millions of diners to order from the broadest, best set of restaurants", she wrote in an email. "They're not playin" a bunch of BS games. "He could make some shocking changes that could be deadly to some of these [existing] brands".
Mr. Mackey appeared to jab at the investor pressure Whole Foods has been facing from activist investors including Jana.
John Mackey, the chief executive of Whole Foods Market Inc., sounded positively smitten Friday at a town hall meeting in which he told employees about the company's pending acquisition by Amazon.com Inc. "We admire the quality standards of Whole Foods".
Whole Foods' board, of course, has a fiduciary duty to its stockholders to consider any viable takeover offer.