Investing.com -Amazon.com Inc (NASDAQ:AMZN). is planning to issue up to $16 billion in debt to fund its planned acquisition of Whole Foods Market Inc (NASDAQ:WFM)., according to Moody's Investors Service.
The online retailer announced in June that it would acquire the grocery retailer for nearly $14 billion. This merger has sparked panic from other grocery companies, concerned that the combination of Amazon's online presence and Whole Food's status as a leading organic grocery retailer would greatly increase competition. In late July, a group of Democrats in Congress urged the U.S. Department of Justice and Federal Trade Commission to scrutinize the deal.
On Monday, when Moody's Investors Service noted the debt plan they also assigned the deal a Baa1 rating and revised Amazon’s credit outlook to positive from stable.The move “reflects our view that despite the increase in debt, the Whole Foods acquisition is an immediate credit positive for the company on a variety of fronts,” Moody’s Vice President Charlie O’Shea wrote in a note. “The acquisition of Whole Foods supports the company’s credit profile as it will ‘kick-start’ Amazon’s existing grocery business and indicates a recognition that a brick-and-mortar strategy, at least in this segment, is beneficial to the company’s growth strategy,” he added.
Amazon's shares were trading up about 1% Monday. Year-to-date, Amazon's stock has appreciated by about 30%. Whole Foods' shares were fractionally higher. They have gained over 35% so far this year.