While the ink is still drying on Amazon.com Inc.'s blockbuster $13.7 billion agreement to buy Whole Foods Market Inc., many are already speculating what the combined company might look like should the deal be completed.
The proposed deal would make a combined Amazon and Whole Foods the nation's fifth-largest grocery retailer, behind Wal-Mart Stores Inc., Kroger Co., Costco Wholesale Corp. and Albertsons/Safeway, according to Cowen and Co. LLC analysts. While the tie-up differs from Amazon's typical acquisition strategy of build first, buy second, Cowen analysts said the acquisition makes sense, given that the grocery market is valued at approximately $1.3 trillion in the U.S.
Above all, it shows that Amazon isn't yet ready to abandon the brick-and-mortar model and believes that physical stores could be the best medium to bring new retail technologies straight to the consumer, said Nancy Tseng, a director in West Monroe Partners LLC's mergers and acquisitions practice.
"This is a key turning point in how we shop, how we buy, how we're influenced and really a reflection of how strong of a role tech and internet companies play in our daily lives," Tseng said.
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