Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Amazon-WFM Merger Deal Clears Shareholder, Regulatory Hurdle

By Zacks Investment ResearchStock MarketsAug 23, 2017 09:11PM ET
www.investing.com/analysis/amazonwfm-merger-deal-clears-shareholder-regulatory-hurdle-200209300
Amazon-WFM Merger Deal Clears Shareholder, Regulatory Hurdle
By Zacks Investment Research   |  Aug 23, 2017 09:11PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Amazon.com, Inc.’s (NASDAQ:AMZN) much-awaited acquisition of Whole Foods Market, Inc. (NASDAQ:WFM) has overcome two of its biggest hurdles.

The pending deal has been granted an antitrust clearance by the Federal Trade Commission (FTC). Notably, FTC does not expect the deal to hurt competition in any way, and has thus given a nod to the deal. Also, the Whole Foods Market shareholders have approved the buyout.

Importantly, these were the last approvals required to complete the merger. Subject to the remaining customary closing conditions, both the companies expect the transaction to close by the end of this year.

Amazon has underperformed the industry on a year-to-date basis. The company’s shares have gained only 27.8%, lower than the industry’s gain of 50.3%.

Details

In June, Amazon inked a definitive merger to purchase a leading natural and organic foods supermarket, Whole Foods Market for $13.7 billion. The all-cash transaction involves buying Whole Foods for $42 per share.

The company recently announced a private offering of bonds aggregating $16 billion to fund its acquisition of Whole Foods Market, Inc.

On completion, Whole Foods will continue to operate with its current brand name and John Mackey will remain the CEO of the company. Amazon could likely become the fifth largest United States grocery retailer after Wal-Mart (NYSE:WMT) , Kroger (NYSE:KR) , Costco (NASDAQ:COST) and Albertsons/Safeway.

The deal gives Amazon an opportunity to leverage Whole Foods’ 460 stores across the United States, the United Kingdom and Canada, 87,000 employees, and its solid reputation.

Deal Rationale

The deal will open a window of opportunities for Amazon in the retail market. Online retail sales are expected to decelerate, while the overall retail market still holds a lot of potential. This might be because a large number of customers still prefer shopping offline and will continue to do so in the future. This is particularly true when it comes to grocery.

Therefore, Amazon has been making moves to gradually merge online and offline retail.

Amazon might add a few new offline and online features to Whole Foods’ stores in the future. The deal gives Amazon opportunities to leverage its resources and technological prowess to enhance shopping experience by cutting time and increasing convenience. This in turn could give it an edge over competing retailers.

We believe that the acquisition will not only reshape the retail landscape but also help it counter competition, if it manages to get a first mover advantage.

Bottom Line

In the face of slow e-commerce growth and mounting competition, Amazon is looking for ways to branch out to physical retail, a sizable brick-and-mortar footprint.

So Amazon’s increasing transition from build-to-buy option is a clear indication of the company wanting to speed up its market penetration, expansion and competitive strategies.

Although brick-and-mortar initiatives are relatively new, investors will see far more growth if Amazon could repeat its past success in this space. Everything that Amazon touches has been transformed to gold and its brick-and-mortar venture could well add another feather in its cap.

Zacks Rank

Currently, Amazon has a Zacks Rank 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

One Simple Trading Idea

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.

Learn more >>



Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Wal-Mart Stores, Inc. (WMT): Free Stock Analysis Report

Kroger Company (The) (KR): Free Stock Analysis Report

Whole Foods Market, Inc. (WFM): Free Stock Analysis Report

Original post

Zacks Investment Research
Amazon-WFM Merger Deal Clears Shareholder, Regulatory Hurdle
 

Related Articles

Amazon-WFM Merger Deal Clears Shareholder, Regulatory Hurdle

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email