Amazon to buy US grocer Whole Foods Market for $13.7 billion
NEW YORK :Amazon is once again shaking up the retail sector, with the announcement on Friday it will acquire upscale US grocer Whole Foods Market, known for its pricey organic options, in a deal that underscores the online giant’s growing influence in the economy.
In the $13.7 billion all-cash deal, Amazon will buy the Texasbased champion of organic and specialty food for $42 a share.
Whole Foods, which has faced pressure from activist investors, will continue to operate stores under its brand and will be led by co-founder and CEO John Mackey, the companies said.
“This partnership presents an opportunity to maximise 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.
The announcement had immediate and punishing consequences on Wall Street for retailers, such as Wal-Mart Stores, that sell groceries and are expected to face even tougher competition with Amazon now much more active in the space.
In May, under pressure from Jana Partners, Whole Foods replaced five board members and its chief financial officer. The hedge fund said the company was undervalued and needed to overhaul its operations and consider “strategic alternatives,” code for a sale.
Mackey, who has viewed Whole Foods as a “mission-driven” company in improving American food, castigated Jana as an example of craven capitalism. Mackey is famous for growing Whole Foods from a tiny health-conscious grocer in Texas far from the US coasts into a giant in upscale foods.
The deal is the latest big move for Amazon and CEO Jeff Bezos, who grew Amazon from a small online bookseller in the 1990s into a global retail behemoth that delivers a wide range of goods and creates award-winning entertainment broadcasts.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Bezos said.