Amazon to Acquire Whole Foods Market for $13.7 Billion

Austin, Texas-based Whole Foods Market operates over 460 stores, including this location in Houston. Austin, Texas-based Whole Foods Market operates over 460 stores, including this location in Houston.

Seattle — Online retail giant Amazon (NASDAQ: AMZN) has agreed to acquire luxury grocery chain Whole Foods Market Inc. (NASDAQ: WFM) for $13.7 billion.

The all-cash transaction amounts to $42 per share and includes the grocer’s net debt.

Whole Foods Market will continue to operate stores under the Whole Foods Market brand. John Mackey will remain CEO of Whole Foods Market, and the company’s headquarters will stay in Austin, Texas.

“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,” says Mackey.

Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions. The parties expect to close the transaction during the second half of 2017.

“It seems that Amazon, after all, is one of brick and mortar’s biggest believers — and for good reason. The grocery sector has been in major growth for some time now, and Amazon’s entry into the space will be a game changer,” says Rafael Romero, vice president of Coral Gables, Florida-based CREC. “It will be interesting to see how other high end and organic foods-focused grocers will react. While I don’t believe that the industry saw this coming, Amazon has been active in building its own physical stores, and expansion through acquisition is an age-old business model.”

Whole Foods Market locations are mostly in high income areas, where consumers are more likely to pay subscriptions for home delivery services, according to grocery expert Joe McKeska of Oak Brook, Illinois-based Elkhorn Real Estate Partners, an A&G Realty company. This could present additional opportunities and synergies for Amazon to capitalize on.

Whole Foods Market, which maintains more than 460 stores across the United States, Canada and the United Kingdom, recorded approximately $16 billion in sales for fiscal year 2016.

Amazon’s stock price closed at $964.17 per share on Thursday, June 15, up from $717.51 one year ago. Whole Foods Market’s stock price closed at $33.06 per share yesterday, up from $30.82 one year ago.

— Kristin Hiller

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