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Should Amazon’s Acquisition of Whole Foods Be Blocked? – Barron’s

Since Whole Foods Market (WFM) agreed to be purchased for nearly $14 billion by Amazon.com (AMZN), analysts have commented on the impact it will have on groceries, pharmacies and food companies. They’ve discussed whether it’s a good deal for Amazon and Whole Foods. But few have questioned whether the deal should be allowed to happen.


Leave it to Standpoint Research’s Ronnie Moas to do just that. In an article last week, he argued that Amazon’s acquisition of Whole Foods should be blocked:

I am very upset about the news this morning regarding Amazon.com, Inc. (NASDAQ:AMZN) taking over Whole Foods (NASDAQ:WFM). It is mind-boggling to me that the government is allowing Amazon to just destroy everything in its path — record stores, book stores, furniture stores, clothing stores, electronics stores, and now grocery chains…

They will soon get to the point where their market cap is a trillion dollars and most of that money ends up in the pockets of a few millionaires and billionaires. They will eventually replace their employees with robots in an effort to enrich those same millionaires and billionaires.

But will the deal be blocked? Legal experts don’t foresee problems with anti-trust regulators, who are likely to let the deal go through.

Moas also sees potential upside for Kroger (KR) but isn’t ready to buy just yet. He cites Kroger’s valuation–it trades at just 11.1 times 12-month forward earnings, according to FactSet–and the fact that there’s only 15% overlap between Whole Foods and Kroger. So why not now? “I don’t think the market has yet processed how much damage the Amazon and Whole Foods combination could do,” Moas writes. “It is a real game changer.”

Shares of Amazon.com have advanced 0.3% to $995.43 at 1:25 p.m. today, while Whole Foods Market has ticked up 0.1% to $42.82, and Kroger has dipped 0.1% to $22.37.


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