Whole Foods CEO calls deal with Amazon 'whirlwind courtship'

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Chief Executive John Mackey said Amazon.com Inc.'s pursuit of the health food chain began with "a blind date" more than six weeks ago, a whirlwind courtship that culminated in Amazon's largest acquisition by far.

"We've seen Amazon expand recently into physical, brick-and-mortar stores, for example their new bookstores and Amazon Go, their small grocery store experiment that doesn't require a customer to go through check out", says Elizabeth Lim, senior analyst for Mergermarket.

In reality, Amazon informally looked at acquiring Whole Foods previous year, according to people familiar with the matter.

It's also not clear if Amazon will sell the technology to other companies - for the sake of being able to profit off this vertical when the competition's already sealed off from its customers anyways.

Amazon's $42-a-share offer amounted to a 27% premium above where Whole Foods' stock had closed the prior day, at $33.06.

It's not yet clear what specific changes are in store at either Amazon or Whole Foods, since the two companies are saying little about their plans.

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However it may not yet be a done deal: a US politician has allegedly urged the US Department of Justice to conduct a review on the merger's impact on prices, jobs and wages for suppliers and neighbourhood grocery stores. Meanwhile, competitors like Wal-Mart, Kroger, and Supervalu went down 7%, 14.5%, and 17% respectively.

"Like an old traditional marriage, where there are all kinds of rules and chaperones, we can't consummate the marriage until we're officially hooked up", he said.

"I think there's the argument that Amazon acquired Whole Foods for free", he said. "But they're just not gonna be, I don't think, forced on us by Amazon".

But he also says the deal could be an opportunity for Amazon to fix some of the issues Whole Foods has faced, as well as an opportunity to attract new customers through lower priced products. "This is not - this is not a Tinder relationship". In December, the tech giant unveiled plans for futuristic grocery stores that don't staff cashiers. "Additionally, over the past year, Whole Foods has also pushed their private label offering, especially with the roll out of their spin-off store 365 by Whole Foods".

Now Bezos "is doing the same to grocery stores, with the biggest losers likely to be their vendors - manufacturers of consumer brands, particularly staples", Yardeni said in a note to clients. Industry observers have said that Amazon may add a selection of discounted, non-organic food to distance the chain from its "Whole Paycheck" nickname. Whole Foods had been working to get better at data collection with the rollout of a loyalty program, and Amazon is expected to give those efforts a significant boost.