Amazon.com said Tuesday that it plans to sell $16 billion in bonds to fund “all or a portion” of its pending $13.7 billion acquisition of Austin-based Whole Foods Market.
News of the bond offering comes as Whole Foods shareholders prepared to vote next week on the proposed sale to Amazon.
Amazon did not say how much it expects to raise from the bonds. The Company is reportedly receiving a bridge loan from banks led by Bank of America Corp. and Goldman Sachs Group Inc. to temporarily fund the deal with Whole Foods.
Amazon has an outstanding bond debt of $8.3 billion and has an A credit rating, according to investment research firm Morningstar.
The e-commerce giant’s deal with Whole Foods was announced June 16 and is awaiting approval both from Whole Foods shareholders and the Federal Trade Commission, which market experts say is likely before the end of the year.
Whole Foods brokered the deal with with Amazon after pressure from high-stake shareholders and a period of stagnant sales and declines in same store sales. The company once revered for its innovation has lately struggled to compete with big box stores, other supermarkets and online retailers and been criticized for its high prices.
Experts predict that Amazon will likely lower prices once it acquires the grocer and use its technology and influence at the grocer’s stores, which Amazon said will keep their “Whole Foods” names. Beyond that, it’s unclear what kind of plans Amazon has for Whole Foods.
Amazon in July reported quarterly profits that were a third of what Wall Street analysts had predicted, but the company’s stock barely reacted as it also reported a 25 percent increase in sales. The public company is worth more than $472 billion at roughly $984 per share as of Tuesday afternoon.
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