Amazon is buying Whole Foods in a deal valued at about $13.7 billion as Amazon continues to expand its physical presence through the brick and mortar business. The deal is expected to close in the second half of 2017.
Amazon agreed to buy Whole Foods for a $42 a share in an all-cash transaction – a $9 premium on the $33 a share that Whole Foods closed at on Thursday. Amazon has also agreed to take on all the company’s debt.
Whole Foods will continue to operate its grocery stores with with co-founder John Mackey staying on as CEO. Headquarters will also remain in Austin, Texas.
The Daily Mail reports:
Amazon is buying Whole Foods in a deal valued at about $13.7 billion, a stunning move into brick-and-mortar retail that sets the stage for more radical store experimentation and intensified competition with grocery rivals.
The online store announced plans to acquire the health food chain on Friday, saying it would play $42 a share in an all-cash transaction – a $9 premium on the $33 a share that Whole Foods closed at on Thursday. Amazon will also take on all of Whole Foods’ debt. The deal is expected to close in the second half of 2017.
Whole Foods will continue operating its grocery stores, with co-founder John Mackey staying on as CEO. Their headquarters will also remain in Austin, Texas, where the company was founded in 1980.
‘This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,’ Mackey said in a statement on Friday.
he deal unites the online juggernaut with the grocery store chain that fell behind as the organic and natural foods it helped popularize expanded to more locations and shoppers found ‘good enough’ alternatives.
Amazon already offers grocery-delivery services in five markets, but the Whole Foods purchase – with its 465 locations in North America and the UK – would let it expand to many more. Amazon also offers grocery shipments elsewhere, but that’s tough with perishable foods.
‘Amazon clearly wants to be in grocery, clearly believes a physical presence gives them an advantage,’ Michael Pachter, an analyst at Wedbush Securities Inc. told Bloomberg. ‘I assume the physical presence gives them the ability to distribute other products more locally. So theoretically you could get five-minute delivery.’