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Why Your Retail Experience Just Changed Forever — Amazon Swallows Whole Foods

The Whole Foods Market in Midtown New York. (TIMOTHY A. CLARY/AFP/Getty Images)

Last Friday, Amazon.com AMZN +0.93% sent another shock wave rippling through all retailers. The e-commerce giant announced the intention to purchase health foods grocer Whole Foods for $13.7 billion. Share prices for Wal-Mart, Kroger, and Costco all tumbled. The New York Times described Amazon as the “new breed of Silicon Valley conglomerates.”

The size of the deal is atypical. Since listing its stock publicly in 1997, Amazon has acquired nearly 80 other companies, including movie-and-TV information provider IMDB, the video game streaming site Twitch, and the audiobook service Audible, among others. In all earlier acquisitions, Amazon has eschewed big takeovers. The biggest deal thus far has been the 2009 purchase of online shoe retailer Zappos.com, for roughly $1.2 billion — dwarfed significantly by the Whole Foods announcement.

Stranger still was the market reaction. Economists and financial analysts routinely conduct “event studies,” examining how markets react to firm announcement, whether the market views the investment announced by a company as value-enhancing or value-destroying.

To successfully acquire a target company, bidders often resort to paying an acquisition premium, that is, the difference between the estimated real value of the target and the actual price paid to obtain it. Amazon’s offer represents a 27% premium to Whole Foods’ closing price on Thursday. Similarly, when Microsoft MSFT +0.51% acquired LinkedIn for $26.2 billion, it represented a 50% premium. Last year, when AT&T T -1.32% announced their acquisition of Time Warner, it also paid a 35% premium.

In the short-term, therefore, the target tends to win, while the bidder loses. For example, as expected, LinkedIn’s stock rose 47% to $192.21 while Microsoft’s stock fell 2.6% to $50.14 immediately following Microsoft’s announcement. Between October 19 and October 26, 2016, AT&T’s market capitalization shrank by nearly $20 billion, while Time Warner’s surged by $8 billion. Traditionally, that is exactly what happens after a takeover is announced. Except, that is, when you are Amazon.

On Friday, Amazon’s shares jumped by 2.4%, adding another $11 billion to its market valuation, thus making the whole acquisition nearly free. Whole Foods’ stock, meanwhile, soared by 29% to $42.68 a share, the highest level since May 2015. Then on Monday, it closed even higher, at $43.22 a share.

So exactly what is so special about Whole Foods — which has been struggling with a long slump in sales and a recent reshuffling of its top management — that could take Amazon to new heights? Why are investors warm to what CNBC’s Jim Cramer has called “the most disruptive deal in ages?”

Not All Acquisitions Are Alike

In 2001, Harvard Business School’s Joseph Bower wrote an influential piece in the Harvard Business Review where he described how managers often mistakenly lump all mergers and acquisitions (M&A) together, which in fact, represents very different strategic activities, each presenting differing challenges. Mixing them only makes it harder for an M&A to pull off. That explains, in part, the abysmal track record confirmed by nearly all studies: 70% to 90% of mergers and acquisitions fail.

When a CEO wants to boost corporate performance, the most common form of M&A in a mature industry is to consolidate capacity. In May 2016, Nissan acquired a 34% stake in Mitsubishi Motors. Carlos Ghosn, CEO of Nissan said, “We have the potential to be in [the] top three.” Such is the business logic of “to eat or be eaten.” The parent company closes the less competitive facilities, eliminates overlapping functions, shuts down idle capacity, and improves operational efficiencies. The goal is to achieve greater economies of scale to lower overall costs.

Alternatively, top management may use M&As to jump-start long-term growth by embarking on a “geographic roll-up” or “product-market extension.” The parent company lets the newly acquired entity leverage the existing model to turbocharge growth. When Spinbrush was acquired, it gained immediate access to the distribution channels that P&G had nurtured over the years. When VMware was acquired, it tapped into a long list of existing EMC customers. Few changes with respect to strategy or operating models were required on either side. Synergy was immediate and apparent.

Obviously, what may seem a perfect match on paper may not be so in reality. The success of Pepsi-Cola’s acquisition of Frito-Lay, owing to the direct store delivery logistics system which PepsiCo had honed over the years, didn’t translate well when PepsiCo later acquired Quaker Oats. As the latter acquisition unfolded, managers at PepsiCo painfully discovered that its traditional warehouse delivery method had very little in common with that of Quaker’s, and consequently, the acquisition failed to meet the financial expectations.

Most interesting perhaps is the third type of M&A. It entails investing in a company whose business model has yet to be proven. The target company is often an upstart poised to disrupt an existing industry. The acquisition is as much about preempting future competition as it is about buying a disruptive business model. That’s what drove Wal-Mart to acquire Jet.com for $3 billion in 2016. The same can be said for Unilever’s $1 billion takeover of the Dollar Shave Club, or for General Motor’s $500 million investment in Lyft—made in the hopes of doubling down its ride-sharing efforts. Growth prospects notwithstanding, these startups were far from achieving profitability. However, they offered a promise to pivot the outmoded business of the established companies.

Acquire to Reinvent

Viewed in this light, Amazon’s purchase of Whole Foods is truly in a class of its own. None of the conventional reasons can explain the acquisition. For one, Amazon won’t be consolidating the grocery sector. By the end of 2016, Walmart commanded the lion’s share with 14.45% in the food and grocery market. Whole Foods had a paltry 1.21%, while Amazon’s share was negligible at 0.19%. The product categories between Amazon and Whole Foods are also so distant that it’s hard to imagine a viable “one-stop shopping” strategy. It’s unlikely that quinoa lovers would pick up an e-reader or set of Wi-Fi speakers while shopping at Whole Foods. And Whole Foods itself is definitely not going to disrupt Amazon.

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WARNING: Bullshit alert – how do they get away with this crap? JOANNA GAINS TO QUIT FIXER UPPER AND SELL FACE CREAM

Joanna Gaines of Fixer Upper Breaches Her HGTV Contract, But You’ll Never Guess Why

UPDATED WEDNESDAY, JUNE 21, 2017

BREAKING NEWS: HGTV has ousted Joanna Gaines for breaking her contractual agreement, not even Chip knew what was going on. News broke of this legal whirlwind just a few days ago. Apparently, things have been going downhill for a while; but now it’s safe to say the boat has sunken.


It all started late last November when Joanna Gaines, host of the popular HGTV show Fixer Upper, signed a deal with Shark Tank’s Lori Greiner. The deal states that Joanna’s New Cosmetics Line will be picked up and promoted by the shopping channel QVC. Joanna is very proud of her line. She has been quoted as saying, “This is more than just a beauty line. This is what every woman has been dreaming of for most of her adult life.”

The problem is: HGTV and QVC are rival competitors. There is a clause in Joanna’s HGTV contract that clearly says she is forbidden from promoting or doing business with any other channel or media company. It was later discovered that not even her husband, Chip, knew what she was constructing in the background. When her hidden secret surfaced, it caused a rift in their marriage. Because of this, HGTV has decided to let him carry on the show by himself, without her.

The decision doesn’t seem to bother Joanna at all. She says the show was just a stepping stone to her real dream; which is running her beauty line. When the executives at HGTV discovered she has no intention of canning her cosmetics business, they fired back with a law suit. The law suit claims that she is contractually obligated to request permission of the network before she can start any new business. In response, Gaines has filed a counter suit. She says the only reason HGTV is giving her a hard time is because her miracle face crème really works, and they want to own a portion of her company.

What Is Her Beauty Product And What Does It Do?.

We were able to do a little snooping and found out what this mystery line was all about. The company is called Luminary and it is a cutting-edge Wrinkle Reducer And Anti-Aging Serum. Her product line is becoming so popular, even top beauty experts such as Bethany Mota and Michelle Phan are singing Luminary’s praises.

“Something was just telling me this is the next chapter of my life.” Joanna said in a recent interview. She continued, “There are lots of skin products out there that didn’t work for me… So, I got some of the world’s leading skin experts together to create Luminary. And this one actually works. I truly feel like the show was holding me back from realizing my true potential. But my new path feels right.”

But What About Chip?

Chip is such a great husband that he’s decided to decline HGTV’s offer to do the show by himself. Instead he’s opted to work alongside wife and become the director of operations at her new company.

Since her secret has been leaked to the public, Joanna has decided to break ties with QVC and focus on promoting Luminary herself.

We asked Joanna if she could provide coupons that would allow our loyal readers to try Luminary at a discount. Her response was better than we could have imagined. Joanna went a step further by agreeing to give 150 of our readers a supply of Luminary absolutely Free! You just cover shipping. TRY OFFER FREE NOW

Gaines said she is certain her magical face cream will work wonders for anyone who tries it. And she is so certain, that she is willing to let you try it for free.

So We Decided To Put her rising product to the test

Our interns sent out a companywide email asking both men and women if they’d like to try Luminary for our test. Some wanted to try it, some wanted to see how it worked for other people first. However, nobody wanted to be the first to try it… Except one brave soul. Brenda Talarico, our 54-year-old Senior Editor. She volunteered to go first and give this magical elixir a shot.

Here Are Brenda’s Results:

DAY ONE:

“It’s just the first day and I could already see a big difference. Within seconds my loose, saggy skin began to tighten and firm up. I could literally feel the difference as soon as I put it on. It was a slight tingle, but nothing over-powering. To be honest it was actually kind of soothing and therapeutic. My husband even took notice, he said I look just like I did when we met 25 years ago! I’m already in love with Luminary and it’s just day one… Let’s see how tomorrow goes…”

DAY SEVEN:

After five days of using Luminary, I was shocked at the drastic results.

“Within my first 5 days of using Luminary, I was a total believer. Now it’s day 7 and I’m still seeing my appearance improve daily. I used to have blotchy, dry skin… But now my skin-tone is even, and moisturized. Those yucky fine-lines and dark circles under my eyes are beginning to vanish too. My results haven’t stopped yet, so I’m going to keep going and see how young I can truly look.”

DAY FOURTEEN:

“This is incredible! I ran into an old friend from college and she told me I look exactly the same as I did back then… She went on to ask me which plastic surgeon I used. I explained to her that I didn’t have any cosmetic surgery done, but she didn’t believe me… I had to show her my bottle of Luminary just to prove it to her. Wow! This stuff is truly amazing. Words can’t even begin to describe.”

Brenda’s Final Thoughts:

“I’m only 54 and had already given up skin products… I was convinced that none of them worked… However, I must admit; Luminary has proved me wrong… It has truly improved the texture of my skin dramatically. The dark spots have all disappeared and the puffy bags under my eyes have been deflated. I’m so glad I put my skepticism to the side and decided to give this amazing face saver a try. – Brenda Talarico, Senior Editor – PEOPLE Magazine

The Verdict:

Using the Luminary system has removed over 87% of Brenda’s fine lines and wrinkles. It has also tightened and smoothed out the skin on her face and neck. All while removing the sagging, aging, and dehydration from her skin

Here’s How It Works:

Decades worth of sound science has been used to develop Luminary. This incredible face cream contains high concentrations of Proprietary Biosphere and QuSome, which are well known for their age defying properties. This topical treatment also contains Dermaxyl (better known as a facelift in a jar), and Ester-C (an active anti-aging compound in Biosphere). When these ingredients combine, wrinkles and fine lines stand absolutely no chance whatsoever.

But Will This Work For You?

The short answer is yes. We asked Joanna if Luminary will work for anybody, and here is what she had to say. “If you have a face, and your face has skin, Luminary will work for you. Guaranteed. It doesn’t matter your skin type, skin condition, race, or age. Luminary was created with everybody in mind. As a mixed-race person, that was the first thing I made sure of.” – Joanna Gaines

NOTE: In order to achieve the best results, you have to use the entireLuminary system for a minimum of 30 days.

There are less than 150 free bottles of Luminary left, so act now in order to claim yours. .

offer

(*EXCLUSIVE OFFER FOR OUR READERS*)

Note: Brittany used both Luminary to erase her wrinkles, we suggest to use both products together to get the best results possible.

Update: Only 6 Trials Still Available. Free Trial Promotion Ends: Wednesday, June 21, 2017

Receive A Free Bottle Of Luminary

Take advantage of our exclusive link and pay only $4.95 for shipping!
Risk FREE Trial!

This special offer ends: Wednesday, June 21, 2017

 

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