Could Amazon Buy Target? Prominent Analyst Predicts It Could

One year after entering the brick and mortar game by buying Whole Foods, Amazon could be looking to expand its presence in physical locations by scooping up major chain retailer Target in 2018, according to one analyst.

Gene Munster, market analyst and founder of Loup Ventures, suggested Amazon might the move within the next year. He called the forecast his “boldest 2018 prediction” in a recent list of tech predictions for the next year.

In his report, Munster backed his suggestion of Amazon taking over Target by saying the timing will be difficult but “seeing the value of the combination is easy.” According to the analyst, Amazon sees a future in retail both online and offline, and could find an ideal partner for in-person shopping with Target.

Munster pointed to what he called shared demographics among the two major retailers and the “manageable but comprehensive store count” of Target, which would give Amazon physical locations across the country from which it could operate.

“Target’s focus on moms is central to Amazon’s approach to win wallet share. Amazon has, over the years, aggressively pursued moms through promotions around Prime along with loading Prime Video with kid-friendly content,” Munster wrote.

As an example of how the partnership between Amazon and Target could work, Munster pointed to the ecommerce giant’s purchase of Whole Foods to show how the combination of online and offline operations can be utilized.

The 470 Whole Foods locations has provided Amazon with opportunity to test its retail concepts like Amazon Go—stores that allow consumers to walk in, take products, and pay without going through the standard checkout process.

The acquisition of a store like target would increase its potential locations for such stores to about 2,300—well behind Walmart’s total of more than 11,000 stores globally but more than enough to experiment with and normalize the company’s concepts that could change the fact of retail.

Munster noted the deal would not come without its fair share of obstacles, including increased scrutiny from the Trump administration that may look to use antitrust laws as a way to punish Jeff Bezos, Amazon CEO and owner of the Washington Post—which has regularly produced critical coverage of President Trump.

Despite such challenges, Munster seemed sure that the deal would be approved. According to his analysis, the combination of Amazon and Target would eat up about a 13 percent share of the total retail market in the U.S., still well behind Walmart’s 23 percent share.

Were such a deal to go down, Munster predicted Amazon would pay about $41 billion for the struggling brick and mortar retailer, which would account for about eight percent of Amazon’s market cap of $564 billion. The company’s acquisition of Whole Foods cost $13.7 billion.

While the acquisition might make sense, there’s no guarantee that Munster’s prediction will come true. He’s long predicted that Apple will release its own TV at some point and has pushed rumors that the company will produce its own car , both of which have yet to come to fruition.