When the dust finally settled on Amazon.com, Inc. (NASDAQ: AMZN)’s historic $13.7 billion buyout bid for Whole Foods Market,
Inc. (NASDAQ: WFM) on Friday, Whole Foods stock was
up 29.1 percent on the day, while Amazon stock
finished the day up 2.4 percent as well. The deal has such wide-reaching ramifications that it will impact a number of competitors,
investors and companies outside of the grocery business as well.
Related Link: The
Sell-Side Response To Amazon–Whole Foods Deal
Here’s a look at some of the biggest potential winners and losers from the Amazon/Whole Foods buyout.
Winner: Whole Foods
Not only did Whole Foods shares jump to $42 on the buyout news, the stock continued its momentum on Monday with an additional 1
percent gain. Shares are trading $1 above the buyout price on hopes that Wal-Mart Stores Inc (NYSE: WMT) or another Amazon rival may outbid Amazon as a defensive play.
Losers: Other Grocery Stores
Kroger Co (NYSE: KR) shares tumbled 9.2
percent on Friday after a 18.8 percent drop on Thursday. Sprouts Farmers Market Inc (NASDAQ: SFM) shares dropped 6.2 percent, Target Corp (NYSE: TGT) shares dropped 5.1 percent, Costco Wholesale Corp
(NASDAQ: COST) shares tumbled 7.1 percent, and Walmart stock
declined 4.6 percent. “Today is a day that will live in infamy for everyone who sells groceries in this country,” CNBC analyst Jim
Cramer said.
Winner: Transportation Stocks
The companies that will be responsible for making many of these new Amazon grocery deliveries will be major beneficiaries of the
deal. The news is “unequivocally positive” for XPO Logistics Inc (NYSE: XPO) and also good news for Old Dominon Freight Line (NASDAQ:
ODFL), TRC Worldwide Inc (NASDAQ: YRCW) and ArcBest Corp (NASDAQ: ARCB) as well, Credit Suisse analyst Amit Mehrotra wrote on Sunday.
Loser: PowerShares Dynamic Retail ETF
The good news for investors is that Whole Foods makes up 3.4 percent of the PowerShares Dynamic Retail (ETF)
(NYSE: PMR)'s total weighting, according to ETF Channel. The bad news is that Kroger (3.8 percent),
Costco (4.7 percent) and Walmart (4.8 percent) all represent even higher weightings, while Amazon is nowhere to be found.
Winner: Janna Partners, LLC
Activist hedge fund Janna Partners owned more than 26 million shares of Whole Foods stock as of the fund’s last 13F filing. That means that the value of
Janna’s stake jumped by nearly $250 million on Friday alone.
Loser: Whole Foods Suppliers
Whole Foods suppliers United Natural Foods, Inc. (NASDAQ: UNFI), Hain Celestial Group Inc (NASDAQ: HAIN) and others may no longer get as sweet of a deal under Amazon. Cramer says
investors should avoid most stocks at this point.
Winner: Grocery Technology Stocks
Don’t expect Walmart, Costco and others to sit idly by while Amazon steals their business, JPMorgan analyst Paul Coster said Monday. “We suspect the AMZN–WFM combination could introduce
urgency into retailers’ technology investments,” wrote in a
new note.
Coster named self-checkout technology leader NCR Corporation (NYSE: NCR) as his top grocery tech play, but also mentioned Oracle
Corporation (NYSE: ORCL), Pitney Bowes
Inc. (NYSE: PBI), salesforce.com,
inc. (NYSE: CRM) and others as potential partners with
the rest of the grocery industry.
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