In a whirlwind, one-month courtship, Amazon (AMZN) and Whole Foods Market, Inc. (WFM) announced on June 16 that the two firms have agreed to merge, with Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion.
Both companies anticipate the deal will close soon, likely in the second half of 2017.
Clearly, financial industry experts see major ramifications for the grocery industry - and for industry stocks and ETFs - from the Amazon bombshell. Some of that fallout has already started, with both grocery and retail stocks and exchange-traded funds suffering share declines after the merger was announced.
"This purchase is a shake up to the grocery industry," says Kristin Hull, founder and portfolio manager with Nia Global Solutions, in Oakland, Calif. "In the short run, our largest grocery store stocks, Walmart (WMT) , Target (TGT) and Costco (COST) all fell Friday with the news".
Companies offering healthy and organic food products -- such as Dannon or WhiteWave Foods -- that will be sold or distributed by others "will do fine," says Hull. "However, brick and mortar stores and chains -- like Natural Grocers -- may suffer."
Hull says that as Amazon changes the very nature of the way we shop, these other go-to grocery stores will have a difficult time competing. "They'll either be scooped up by Amazon or others who have mastered the online/ home delivery process, or may lose customers and market share to convenient delivery sources," she says.