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June 16 (Reuters) - Amazon.com Inc is buying Whole Foods Market Inc for about $13.7 billion at a price of $42 a share, the companies said on Friday.
* Supermarket stocks fall on announcement
BRUCE BITTLES, SARASOTA, FLORIDA-BASED CHIEF INVESTMENT STRATEGIST AT BROKERAGE AND RESEARCH FIRM R.W. BAIRD & CO:
“Amazon’s got its tentacles everywhere and that’s another place to go. Amazon sees that industry changing significantly – and they see that people don’t necessary go to the grocery store anymore.” BRIAN REYNOLDS, CHIEF MARKET STRATEGIST AT NEW ALBION PARTNERS, A BROKER DEALER IN NEW YORK, NEW YORK:
“If a stock price goes down, like Whole Foods did, that’s going to attract activist investors. The deal is not (valued at) the highest price Whole Foods has ever traded at, but it’s going significantly above the lows. That illustrates the trend of activists helping to put a floor under stock prices. If the CEO can’t get a stock price up, activists will come in to try and do it. That’s a huge change from two decades ago. This will put more pressure on grocery stores, especially their CEOs.”
TIM GHRISKEY, CHIEF INVESTMENT OFFICER OF SOLARIS ASSET MANAGEMENT IN NEW YORK, NEW YORK:
“That was rumored, I totally dismissed it. Wow. Amazon can pour money into any investment and they don’t need to make money. Investors are used to them not making money. It is $13.7 billion but it is still small relative to the size of the whole company.
”It seems like a bit of an odd purchase because it is brick-and-mortar retail. On the other hand it gives them a distribution footprint to deliver goods in a short time frame. Perishable goods and food aren’t always the best when delivered by FedEx. Obviously canned goods are.
”It gives them a presence, the stores can be expanded to do other things. Amazon has talked about having a brick-and-mortar retail presence where perhaps people just go in to look at things.
”This could be part of that strategy – you take part of a Whole Foods Store and you add in Echo and all the other Amazon products. More and more we will see Amazon brand products as they work to create their own brand at retail.”
Reporting By David Gaffen