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Analyst thinks Amazon could buy Target this year

Bloomberg logoBloomberg 1/2/2018 Beth Mellor and Matthew Boyle

Video by Wochit Business

Amazon's shake-up of the retail landscape may not be over, according to one well-known technology analyst.

The internet giant will acquire discounter Target, Loup Venture co-founder Gene Munster wrote in a report highlighting eight predictions for the technology industry in 2018. Amazon made waves in retailing last year with its $13.7 billion purchase of upscale grocer Whole Foods Market.

“Target is the ideal offline partner for Amazon for two reasons, shared demographic and manageable but comprehensive store count,” Munster wrote, noting both companies focus on mothers and families. “Getting the timing on this is difficult, but seeing the value of the combination is easy.”

a close up of a white background: Targeted? © Provided by Bloomberg LP Targeted?

Market-share numbers suggest a deal would be approved by regulators, and Walmart would still have a larger share than an Amazon-Target combination, Munster said. He estimated a takeout valuation of $41 billion, or a 15 percent premium to Target’s value. Target shares rose as much as 3.7 percent Tuesday in New York, while Amazon gained 1.6 percent.

“Investors would view this as Amazon taking over the world, and that’s a good thing,” Munster said in an interview on Bloomberg Radio.

A Target representative declined to comment on the report. Amazon didn’t immediately respond to a request for comment.

Munster, 46, co-founded Loup Ventures, a venture capital firm focused on virtual reality and artificial intelligence, in early 2017. Before that, he’d worked for 21 years as an analyst at Piper Jaffray Cos., where he was known for his accuracy in predicting Apple’s financial potential.

Prognosticating about Amazon’s next deal has become a common theme for analysts. In November, DA Davidson analyst Tom Forte wrote that Lululemon Athletica may be attractive to the online retailer, while Citigroup analyst Paul Lejuez recently catalogued a host of potential targets, including Abercrombie & Fitch, Bed Bath & Beyond and Advance Auto Parts.

Still, Amazon may not be interested in just retail deals. Last month, CFRA bank analyst Ken Leon wrote that he foresees the internet company buying a small- or mid-sized bank in 2018.

Amazon-Target deal "unlikely in this political environment," Techonomy CEO David Kirkpatrick says.


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