By Austen Hufford
Amazon.com Inc. said it would buy Whole Foods Market Inc. for $13.7 billion as the giant internet retailer makes a deeper push into the grocery space.
Amazon /zigman2/quotes/210331248/composite AMZN +4.99% will pay $42 a share for Whole Foods , valuing the grocer at a 27% premium to its closing price Thursday. The deal is expected to close in the second half of this year.
Amazon’s move tanked the stocks of grocery competitors as investors worried that Amazon could do to grocery the same as it did to booksellers. Kroger Co. shares /zigman2/quotes/206215053/composite KR +2.09% fell 14%, Target Corp. shares /zigman2/quotes/207799045/composite TGT +3.71% fell 12%, Supervalu Inc. shares fell 19%, Costco Wholesale Corp. shares /zigman2/quotes/201191698/composite COST +5.16% fell 6.2% and Wal-Mart Stores Inc. shares /zigman2/quotes/207374728/composite WMT +1.96% dropped 5.8%.
Amazon’s move into the grocery business comes at a time of change in the industry. Consumers are buying more of their groceries outside of traditional supermarkets. Online merchants, discounters and meal-kit delivery services are all grabbing market share. At the same time, a global commodity glut has pulled down prices for many staple foods over the past 18 months, putting pressure on many retailers to lower prices.
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