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• The Wall Street Journal has a story suggesting that if the Amazon plan to buy Whole Foods for $13.7 billion goes through, Amazon's predilection for driving down prices could create margin pressure on companies such as Kraft Heinz, Kellogg and Mondelez - all of which already have been facing profit challenges.

The Journal writes that "Amazon’s initial priority will likely be to lower Whole Foods ’ operating costs so that it can charge less for groceries, in hopes of winning more customers, according to the people familiar with the company’s thinking." But the expectation is that it will also pressure brand manufacturers to lower their prices, as well as using Whole Foods' 365 private label as a cudgel when and where appropriate.


Reuters reports that an acquisition of Whole Foods by Amazon will only take it so far if it wants to become a dominant US food retailer:

"The e-commerce giant would need to add a large network of specialized grocery distribution warehouses, former AmazonFresh employees and logistics experts said. This is something Wal-Mart Stores Inc and other competitors have already done. Whole Foods, with a relatively small distribution footprint of its own, does little to change the picture for Amazon, they said."

While Whole Foods has about one million square feet of warehouse space, Amazon actually has 100 million square feet ... though the vast majority is not equipped to deal with fresh, refrigerated and frozen foods. In other words, the $13.7 billion Amazon plans to spend for Whole Foods "will be just the start of a long and costly process" as it ramps up.


• The Puget Sound Business Journal reports that Amazon will have close to $8 billion "left in its war chest after subtracting the $13.7 billion needed to buy Whole Foods Market ... That's according to Amazon's reported first-quarter cash and equivalents. Amazon's cash on hand hasn't dipped that low since the third quarter in 2014, when the company reported $6.9 billion in cash on hand."

The Journal goes on: "Considering the Seattle e-commerce company spent only $103 million on acquisitions last year and hasn't spent more than $900 million a year since it bought Zappos.com for $1.2 billion in 2009, $7.8 billion is plenty to finance more acquisitions in the immediate future."


Business Insider reports that John Foraker, president of Annie's Homegrown, believes that if Amazon is successful in acquiring Whole Foods, it could "meaningfully address (an) issue that plagues communities across the US: food deserts."

""The thought of Whole Food's mission combined with technology and the ability of a company like Amazon to help conquer some of the last-mile issues that have prevented access and distribution into really difficult places seems like a golden opportunity," Foraker tells Business Insider, adding, "If you live in an poor urban or rural neighborhood that doesn't have good grocery stores around, you think, 'I got to get in a car — if I have one — and drive 30 or 45 minutes to get to a place where I can buy fresher, healthier food. The idea of those two [companies] coming together will give you most of what you need to solve that."
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