Whole Foods shareholders back Amazon deal

Customers shop for produce at a Whole Foods market on October 15, 2014 in San Francisco, California.Image copyright Getty Images
Image caption Analysts expect Amazon’s acquisition to lead to increased options for online ordering and delivery of food

Amazon’s plan to buy Texas grocer Whole Foods for $13.7bn (£10.7bn) cleared an initial hurdle on Wednesday, as shareholders of the supermarket voted in favour of the deal.

Shareholder approval had been expected for the bid, which has been greeted as a game-changer for the food industry.

The merger would combine Whole Foods’ physical footprint with Amazon’s delivery prowess.

US competition authorities must now sign off on the deal for it to advance.

Whole Foods approached the e-commerce giant about a merger this spring, as it grappled with falling sales and pressure from investors such as Jana Partners to improve performance.

Amazon initially offered $41 per share, eventually bumping the price to $42 per share. The $13.7bn value includes assumption of Whole Foods’ debt.

The pressure from Jana led six other companies to express interest in a partnership.

But Whole Foods chief executive John Mackey, who plans to stay on as head of the Whole Foods, told employees in June that with Amazon – which has deep pockets and a history of putting long-term growth ahead of quarterly profits – it was “love at first sight”.

Whole Foods has said it expects the deal to close by the end of the year.

Physical footprint

The deal allows Amazon to leap into the food industry, an area that it has been experimenting with for years.

It also gives the e-commerce firm an instant physical footprint via Whole Foods’ 470 stores in the US, Canada and UK.

That matters because customers still prefer to shop in person, said Miriam Burt, a research vice-president in retail at Gartner.

“For almost all categories of products besides books, music and videos, our research is telling us that customers still prefer to go into the store and interact with the products,” she said.

Ms Burt said she expected that all grocery stores would eventually develop a hybrid model of online ordering and in-store pick-up.

Walmart, one of the biggest food retailers in the US, said it was moving in that direction on Wednesday, as it said its products would be available via the voice-activated Google Assistant.

“Each of the major grocery retailers will get to a point where they suggest a use case where you’re driving home from work, you order your groceries online and then you pick it up from your local store. It’s about making the customers’ lives easier,” Ms Burt said.

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