Amazon sent shock-waves through the stock market when it announced the purchase of Whole Foods Market for $13.7 billion in cash, marking the biggest transaction ever for the e-commerce giant as it pushes deeper into groceries.
While Whole Foods shares are surging because of the 27% premium being paid, other grocers are getting crushed. Kroger was down as much as 17%, Supervalu Inc. dropped as much as 22% and Weis Markets slumped as much as 9.6%.
Even Kroger’s most actively-traded debt is taking a hit. Its $1 billion of 4.45% coupon bonds due in 2047 notched the biggest decline since being issued in January, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Whole Foods came under pressure to find a buyer this year after activist investor Jana Partners acquired a stake and began pushing for a deal. Amazon will pay $42 a share in cash for the organic-food chain, the companies said on Friday.
The slide isn’t limited to the US either. Grocers and discounters’ share prices in Europe are sliding, with Ahold Delhaize, the operator of Food Lion and Stop & Shop supermarkets, slumping as much as 9.6%.
Morrison Supermarkets also dropped as much as 3.2%; Tesco fell as much as 6.7%; Sainsbury's declined as much as 4.8%; Carrefour slumped as much as 4.3%; Casino Guichard Perrachon slipped as much as 3%, and Metro AG lost as much as 1.9%.