Whole Foods CEO calls deal with Amazon 'whirlwind courtship'

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He says other grocers like Kroger, Costco and Walmart are in the process of figuring out what's next and how they'll respond to remain competitive.

Pachter said Amazon was likely to increase spending to build its online grocery business over the next several years, so the acquisition would add only slightly to earnings while boosting revenue significantly. Even the mass-market food makers General Mills and Hormel were under pressure.

The company recently opened a new downtown Seattle headquarters.

Before this merger was announced, WFM's valuation had shrunk significantly.

It will be at least 18 months before anything changes up here, he added. It is now becoming a key piece of Amazon's long-term focus; after all, food is a $700-billion sector in the United States, and nearly $120-billion in Canada. However, that number misses roughly $6 billion from the present value of future operating lease obligations. He describes his company's battle as a "morality play between conscious capitalism and greedy, short-term financial capitalism". But to see mammoth-sized Amazon, with its large revenues and small profits, make the biggest deal in its history, may be surprising for some.

It also has deals with Morrisons, as does Amazon, and Waitrose.

Amazon and Whole Foods getting together isn't a marriage of convenience stores or a sleazy one-night stand.

Amazon's offer of $13.7 billion, representing a multiple of 10 times earnings before interest, tax, depreciation and amortization, could possibly be raised to 11 or 12 times, according to Kevin Dreyer, co-chief investment officer at Gabelli Funds, which holds Whole Foods shares.

Whole Foods is part of the "crème de la crème of the supermarket industry" and is a "hand-in-glove fit" with the educated, relatively affluent demographic of Amazon customers who pay $99 a year for the site's Prime membership that includes free shipping, video streaming and other services, Greif said.

But other experts see advantages to buying Whole Foods beyond just its gourmet and organic food, and access to the affluent customers who favor it. It could also lower costs by automating checkout at the physical stores.

Amazon has shed little light on its plans for the chain of stores since it announced the deal. None of this is firm, however, and some reports show potential (and now unnamed) buyers walking away from the deal if Slack doesn't engage one at this point.

The math on acquisition analysis is very simple when eyed through the economic lens.

And it's coming quickly, not just because of Amazon's hunger to penetrate new markets, but for a broader demographic reason: Young consumers are suddenly shopping online for food. Major Wall Street pros downgrading a stock on back-to-back trading days is never pretty, and there are more boo birds chiming in.

"Rotisserie Chicken and a $1.50 hot dog meals are symbolic but indicative of a low price and high quality strategy which generates consistent global growth and price leadership in the industry", Cowen and Company analysts led by Oliver Chen wrote in a research note Monday. This was reflected in the stock market, with some companies in the food industry seeing their shares fall immediately. They may not want to let an Amazon worker make that choice.

The picture is more complicated for Wal-Mart and Target.

Now with Amazon jumping into the grocery business with a more than 400-location retailer, the price slashing - and competition from private labels - can only intensify.

Whole Foods has over 460 stores, but only a handful of them in Canada.

With WFM now trading at ~$43/share, the market clearly sees potential for a bidding war. Michael Pachter, managing director at Wedbush Securities, says this purchase will bring Amazon into many more American homes in an unprecedented way.

Wal-Mart may be ready. Giving out information isn't one of Amazon's best points. Amazon is still richly valued even if this acquisition works out. However, they will need to be quick and develop new business models. There are other sectors with a more attractive risk/reward profile.