For the procurement of Whole Foods, Amazon.com is looking to fund US$13.7 bn through the debt market. For the ambitious plan of Jeff Bezos, the Amazon CEO, to conquest supermarket business, the acquisition of Whole Foods is important. The world’s biggest online retailer is trading its unsecured bonds worth US$16 bn in as many as seven parts. The largest part of the offering, which is a 40-year security, is expected to gain 1.45 percentage points above Treasuries in a sign of market interest; however less than initial talk of 1.6 to 1.65 percentage points.
For Amazon, this sales marks the first bond-market venture since 2014 and is projected to support the procurement of the organic-food chain, as said in the company’s statement. The alliance, when announced in June 2017, rattled the grocery world. It is anticipated to lead to a reduced price at Whole Foods, the iconic yet grappling high-end grocery store, which is trying to lure a healthy number of low- and middle-income customers. Market experts expect the deal to intensify a price war in an industry, which is affected by persistent deflation and razor-thin margins.
The e-commerce giant is targeting the market with massive bond deals from AT&T, worth US$22.5 bn, and British American Tobacco Plc, worth US$17.25 bn. The Whole Foods deal is looking good as this year’s fourth largest one after a US$17 bn offering from Microsoft. This deal has come at a time when tech enterprises have surfaced as active debt issuers, with Tesla’s debut offer on Aug. 11 and Apple’s first Canadian-dollar debt sale, announced on Tuesday, Aug 15, 2017.