Buying Whole Foods could be Amazon's Waterloo

Amazon buys the Whole Food Market company. The location at 3751 E Foothill Blvd Pasadena Calif.

Amazon buys the Whole Food Market company. The location at 3751 E Foothill Blvd Pasadena Calif.

The deal, expected to close in the second half of this year, gives Amazon -- which has been experimenting with various physical store concepts to make establish itself as a food purveyor - an instant expanse of 460 high-end stores across the USA, in Canada and in the United Kingdom. They are going to pay $42 per share in cash for Whole Foods, which is a 27% premium on the company's closing price. The transaction, will be financed with debt, according to securities filings.

When it raised $400 million in March, Instacart said it operated in 35 markets and had 135 partnerships with grocery retailers around the country.

Amazon's shares were up 3 percent at $993.40, adding more than $14 billion to its market capitalization.

Amazon is buying Whole Foods for $13.7 billion, and that could be bad news for Instacart. The deal will grant Amazon with control over more than 400 stores, integrating the stores with technology. It was recently granted a patent for technology that would block shoppers from comparing prices using their mobile devices while they are in stores. With this new announcement, the company is set to become the biggest grocers in the world-and is expected to rake in billions of dollars in revenue annually.

The Amazon and Whole Foods news even had an impact overseas. John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market's headquarters will stay in Austin, Texas.

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Opposition to the deal came from organized labor, among other critics.

Amazon already offers a home delivery service for groceries in certain markets. Whole Foods was, however, costlier in 1992 as compared to today (keep the times in check) and it has been reducing the prices to keep the sales in check.

Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a non-profit that advocates for the development of local communities, called for antitrust regulators to block the deal, which she said "would dramatically amplify Amazon's online market power". "What we'll be watching next is whether Amazon makes a second big bet in brick-and-mortar by buying another established player, one that sells clothing and other items for example", says Bankrate's Hamrick says. Certainly, it would appear to Cantillon that Bezos sees the future as slightly more nuanced than the vista of couch-bound online shoppers ordering everything from fast food to films online.

Amazon could also get a better picture of customers by marrying data from Amazon and Whole Foods' loyalty programs.

The aquisition of the high-end, elite grocery store chain specializing in organic food, with 456 locations, will allow Amazon to integrate brick-and-mortar retail into its operations, and also move into the grocery industry. Seattle has been the center of that experimentation.

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