The deal is being called a "game changer", as Amazon takes over Whole Foods, for almost $14 billion dollars.
Analysts said the Whole Foods deal could be a sign Amazon is willing to step up acquisitions. However, despite launching its Amazon Fresh food delivery service over a decade ago, the company accounts for less than 0.5 percent of grocery spending in the USA today.
Her new target was the result of combining her "upside" scenario, which contemplated a "take-out" multiple of nine times EBITDA for a price $57 a share, and a downside scenario of $42 per share, should Amazon.com's current offer finally prevail. If the Amazon purchase is approved, access to Amazon's technology and services will likely provide consumers with convenience, as well as lower price points. Sprouts didn't respond to a request for comment.
Mr. Mackey appeared to jab at the investor pressure Whole Foods has been facing from activist investors including Jana.
Amazon now has a grocery delivery service called Amazon Fresh, available in about 20 cities in the US, but it struggled to make enough headway in becoming America's grocer.
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. At the very least, it's well worth the billions of dollars and one full decade spent on trying to enter this domain. "He could make some shocking changes that could be deadly to some of these [existing] brands". The Whole Foods deal is recognition that stores matter in some categories, as Amazon was "willing to spend $13 billion to immediately have stores of their own".
"That's their dilemma", said Roger Davidson, who oversaw Wal-Mart Stores Inc's global food procurement and now is president of Oakton Advisory Group. "Its going to be great opportunities for people in this room", he said.
Whole Foods is part of the "crème de la crème of the supermarket industry" and is a "hand-in-glove fit" with the educated, relatively affluent demographic of Amazon customers who pay $99 a year for the site's Prime membership that includes free shipping, video streaming and other services, Greif said.
"I think retailers are going to have to bring a lot of excitement to the store", said Stew Leonard Jr., CEO of Stew Leonard's, a grocery chain with five locations in CT and NY.