Amazon offers 27 percent premium for Whole Foods Market

Online retailer Amazon has offered $42 per share for Whole Foods Market. The move announced by Amazon has taken many by surprise because of the size of the deal and Amazon’s major move into real world stores. After the deal was announced, Whole Foods Market stock jumped to reach the price offered by Amazon. Amazon stock jumped 3 percent as investors remain optimistic about Amazon’s performance in future.

The announcement of Amazon deal led to 5 percent decline in Wal-Mart Stores stock and Kroger Co declined by 11 percent. Whole Foods Market has strong presence in high-end retail grocery market. The deal values Whole Foods Market at $13.7 billion. Whole Foods Market currently operated 456 stores across the United States.

While Whole Foods has dominating position in natural and organic foods segment, the company has posted declined in sales over the last seven quarters. Even after the acquisition, the grocery chain will continue to operate under Whole Foods Market brand.

Commenting on the deal, Wedbush Securities analyst Michael Pachter said, "The conventional grocery store should feel threatened and incapable of responding."

"Supermarkets will now have to contend with not only competition with each other and non-traditional grocers like Wal-Mart Stores Inc and Target Corp, but with a retailer like Amazon which has the financial capacity to price aggressively," said Mickey Chadha, vice president at Moody's Investors Service.