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Amazon to buy Target? Some Analysts are expecting it in 2018

The last few years have given us many mega-mergers and historical surprises so we would not be at all surprised if another comes down the pipeline. The mega-online retailer Amazon could be ready to jump headfirst into the brick-and-mortar world not only by the Whole Foods purchase but a much bigger competitor to Walmart.

A few analysts are starting to come out with these predictions in the coming year after the tax cuts for corporations. This means Amazon will have tons more money to swallow up other companies and go on a spending spree in the United States. Loup Ventures’ Gene Munster is one analyst predicting Amazon will buy Target in 2018. Target operates more than 1,800 stores in the U.S.

“Target is the ideal offline partner for Amazon for two reasons, shared demographic and manageable but comprehensive store count,” Munster wrote in a blog post.

Amazon purchased upscale grocery chain Whole Foods in June in a $13.7 billion all-cash deal. Shortly after purchasing the chain, Amazon lowered prices on some of the most-frequently purchased items by as much as 43 percent.

The purchase of Target would be a natural fit, Munster wrote. “Target’s focus on mom’s is central to Amazon’s approach to win wallet share. Amazon has, over the years, aggressively pursued mom’s through promotions around Prime along with loading Prime Video with kid-friendly content,” Munster said. “As for retail stores, Amazon’s acquisition of Whole Foods 470 stores along with testing of the Amazon Go retail concept is evidence that Amazon see’s the future of retail as a combination of mostly online and some offline.”

Ultimately the purchase would give Amazon about 2,300 locations via Target and Whole Foods and about $176 billion in revenue. In comparison, Walmart has more than 11,600 locations and $315 billion in U.S. sales.

Neither Amazon or Target commented on the story. Many other analysts weighted in on the issue saying that it may be a good fit and some others say it may not go through because of political reasons. Some have even said that Macy’s that is closing stores this week would be a better and cheaper fit.

Our take: You may soon see a merger with a major Pharmacy chain from Amazon but most likely not with Target. You can bet they will look into a takeover of CVS or Walgreens. Walgreens would be the most likely candidate because they have Boots in the U.K. and much more potential revenue than Target stores.






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