Amazon buys Whole Foods for $13.7 billion
In a convergence of online and traditional retailing, Amazon is buying Whole Foods Market, Inc., for $13.7 billion in cash.
Amazon announced Friday that it will pay $42 a share for Whole Foods, which was founded in 1978 in Austin, Texas, and is still based there.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO, in a statement.
“Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”
Amazon is the world’s largest online retailer by sales. The Seattle-based company had net sales of $35.7 billion in the first quarter, which ended March 31, up from $29.1 billion in first quarter of 2016.
The company, which had sales of nearly $136 billion in 2016, accounted for 43 percent of online retail sales in the United States last year, according to Slice Intelligence, a San Mateo firm that analyzes ecommerce trends.
Whole Foods, known for its selection of organic foods, has one store in the Santa Clarita Valley, in the Valencia Crossroads shopping center on Valencia Blvd.
Whole Foods has more than 460 stores in the United States, Canada, and the United Kingdom. The company had sales of about $16 billion last year.
Shares of competing retailers Kroger Co., Target, and Walmart all fell Friday after the deal was announced, while Amazon shares were up by 2.4 percent. Twenty publicly traded retail chains lost a combined $37.7 billion in market value Friday amid concerns about Amazon’s competitive impact on their business, according to an analysis from CNBC Data.
“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,” said John Mackey, Whole Foods Market co-founder and CEO.
Mackey will remain CEO after the merger and Whole Foods will continue to operate under its own name.
The companies expect the deal to close by the end of 2017, subject to approval by Whole Foods Market’s shareholders and regulators.