Amazon shakes up grocery aisles with $13.7b Whole Foods deal

"The ramifications for all of retail are seismic - not just retailers that sell grocery, but for everyone", Gordon Haskett analyst Chuck Grom said. Walmart, which has the largest share of the USA food market, has been working on lowering prices, while Target has been struggling to turn around its grocery business.

The Amazon.com Inc. (NASDAQ: AMZN) deal to buy Whole Foods Market Inc.

Amazon is in the process of acquiring Whole Foods, a popular supermarket chain in America.

Investors worry that Amazon, which has already won over hordes of shoppers of clothing, electronics and many other kinds of goods, wreaking havoc on department stores and other brick-and-mortar retailers, will do the same thing with groceries.

Amazon is paying $42 per share for Whole Foods, which is a 27 percent premium from Thursday's night close.

Why would Wall Street push shares of Whole Foods higher than the offer price on the table?

But a person close to Instacart told Bloomberg that the startup thinks it can still hang on to its Whole Foods partnership. How?

"The quality will give to provide a cheaper price to consumers", said Whole Foods Shopper Hamid Fhehollahi.

Remember those rumors floating around for the past year that Kroger might buy Whole Foods? While both companies aren't headquartered here - check out Austin Inno for the deal's impact on Whole Foods' home base - the deal is certainly going to have an impact here and everywhere else across the country, if only due to their collective reach.

Amazon has been looking at shop layouts that could allow traditional in-store purchase, online ordering with on-site pickup, and home delivery, using store warehouse space as a distribution point, Ladd said. That is the eighth Amazon bookstore now open around the USA and more are expected in the future.

Whole Foods, founded in 1978, has struggled to differentiate itself as competitors and has cited pressure from restaurant chains, meal-delivery companies and traditional supermarkets. For 10 years, the company has offered a type of food delivery service via Fresh, but that simply won't do, it seems.

Whole Foods will keep its headquarters in Austin and continue to operate under the Whole Foods brand with John Mackey remaining as CEO.

Hartmann said he expects the online retailer to introduce some efficiencies to Whole Foods' operation.

A local expert says the $13.7 billion deal is strategic and will undoubtedly change the industry. The acquisition price implies a trailing 12-month price-to-earnings multiple for Whole Foods of 31 times, versus a 14.4 average for the S&P 500 Food Retail index.

One of those bankers, David Eisman, moved from San Francisco to Seattle to help lead a small team tasked with strengthening ties with the city's biggest companies, including Amazon, Microsoft Corp and Starbucks Corp. It has expanded from a book seller into a merchant of almost all consumer products, as well as producing videos. The Whole Foods purchase would let it expand to many more.

About 450: Number of Whole Foods stores across the country.

Offering the most convenient shopping experience possible continues to drive the competition. Despite its likely new ownership equation-the deal hasn't yet closed-Instacart is doubling down on its anti-Amazon rhetoric.

Instinet analyst Anthony DiClemente said in a note quoted by CNBC that Amazon is going to disrupt grocery business.

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