Could Amazon really acquire Target?

Munster: Amazon.com, Inc. (AMZN) Will Acquire Target In 2018

Amazon continues to make headlines as it expands its e-commerce retail business across different verticals from transportation & logistics, to grocery stores & physical stores. But Amazon would need to dig deep to determine whether Target's operations are worth the expense, according to Jim Fosina, CEO of Fosina Marketing Group.

Gene Munster the Co- founder of Loup Venture believes that the big online retailer will acquire the struggling discount store retailer Target, similar to their acquisition of Whole Foods a grocer that was acquired for $17.5 billion previous year.

"Amazon believe's the future of retail is a mix of mostly online and some offline", Munster said.

The acquisition of 1,834 Target stores, plus Whole Foods' 470 units, would give Amazon approximately 2,300 brick-and-mortar locations, which Munster considers a "manageable but comprehensive" store count.

"Getting the timing on this is hard, but seeing the value of the combination is easy", Munster wrote.

Amazon closed its $13.7 billion acquisition of Whole Foods Market in August.

Both Amazon and Target told KDKA money editor Jon Delano that they had no comment on Munster's prediction.

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While Wal-Mart is the biggest player in the USA, capturing 8.3% of total US retail sales (as of 2016), Amazon and Target together capture a smaller 3.9% of this highly fragmented market.

Amazon shares rose 56% in 2017 versus Target stock's 10% decline. Amazon paid a 27% premium when it acquired Whole Foods, so that estimate may be on the low side. The online retailer has been focused on everything from kid-friendly content on Prime video to bringing Whole Foods into the fold a year ago.

It's also worth remembering that predicting which company Amazon will buy next has become something of a sport for tech and business experts.

But it's not at all clear that Amazon and Target agree.

Target in the U.S. serves a very similar market to its Australian namesake, although the two companies have no commercial connection. Amazon has not publicly hinted at a possible acquisition of Target, so take it with a grain of salt for now.

One shopper liked the idea of Amazon taking on Walmart.

A union would also enable Amazon to leverage Target's 1,834 United States stores in its battle with Walmart, which has more than 4,700 USA stores. Last month, CFRA bank analyst Ken Leon wrote that he foresees the Internet company buying a small- or mid-sized bank in 2018.

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