Tags: Jim Cramer | Amazon | Whole Foods | Game | Changer | Grocery

CNBC's Jim Cramer: Amazon's Whole Foods Conquest Is a 'Game Changer'

(AP/Mark Lennihan)

By    |   Friday, 16 June 2017 10:47 AM EDT

CNBC’s Jim Cramer says Amazon.com Inc.'s purchase of Whole Foods is a "game changer" for the food industry.

Amazon.com Inc said on Friday it would buy U.S. organic supermarket chain Whole Foods Market Inc for $13.7 billion, including debt, marking the internet retailer's largest deal and biggest foray into the brick-and-mortar retail sector, Reuters reported.

“This is such a game changer. ... They will now dominate food within the next two years," the "Mad Money" host said on CNBC's "Squawk on the Street."

"I'm taking down numbers for everybody who sells food. Everybody. Because you can't compete [with] Amazon. They will not let you compete," Cramer said, noting Amazon can now "change the whole paradigm."

The deal, which puts a 27 percent premium on Whole Foods' closing share price on Thursday, would could give the grocer a major competitive edge by allowing it to tap into Amazon's massive power to buy and sell goods at a lower cost, Reuters reported.

Whole Foods recently had come under pressure from activist hedge fund Jana Partners LLC, prompting it to overhaul its board.

"I think that this takes all of the pressure off Whole Foods and gives Whole Foods the opportunity to revitalize that business and of course it stems the criticism from all of these activist investors," said Neil Saunders, managing director of GlobalData Retail in New York.

The deal values Whole Foods at $42 per share. The shares were trading just under that level in early trading, while Amazon's shares were up 0.9 percent at $997.41.

Excluding debt, the deal is valued at $13.39 billion, based on 318.9 million diluted shares outstanding as of April 9.

The grocer will continue to operate stores under the Whole Foods Market brand, the companies said.

John Mackey will continue as chief executive of Whole Foods, and the company's headquarters will remain in Austin, Texas.

Amazon and Whole Foods expect to close the deal during the second half of 2017.

To be sure, Newsmax Finance Insider Charles Sizemore recently predicted to Newsmax TV that Amazon is about to "upend the grocery industry" as it plans to expand its grocery business with shops that let people quickly pick up milk, vegetables or other perishable foods.

"Amazon is trying to get your grocery dollars for a very good reason,” Sizemore told Newsmax TV’s JD Hayworth.

“Groceries, while they are a low-margin business, it's still something that every American pays for, usually on a weekly basis. If you're already buying your groceries at Amazon, you might also buy something that's higher margin,” he said.

 "Amazon's smart, they know what they're doing here," he explained. "I have a feeling they're about to really upend the grocery industry. It's about to get really interesting. It's just not quite what everyone's expecting."

(Newsmax wire services contributed to this report).

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CNBC’s Jim Cramer says Amazon.com Inc.'s purchase of Whole Foods is a "game changer" for the food industry.
Jim Cramer, Amazon, Whole Foods, Game, Changer, Grocery
Friday, 16 June 2017 10:47 AM
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