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Amazon enters the grocery market with $13.7B purchase of Whole Foods

Amazon.com Inc. has officially entered the grocery business.

The Seattle-based online shopping and data storage giant announced today that it would be purchasing Austin-based organic grocery chain Whole Foods Market Inc. for $42 (all figures USD) per share, or $13.7 billion.

Under the terms of the agreement, Whole Foods co-founder and CEO John Mackey will continue to run the business from its current Texas headquarters, and its 460-plus locations across the Canada, the U.S., and U.K. will continue to operate under the Whole Foods brand.

In a June 16 statement, Mackey called the partnership 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.”

Amazon founder and CEO Jeff Bezos, meanwhile, said that Whole Foods has been “doing an amazing job” of “satisfying, delighting and nourishing customers for nearly four decades… and we want that to continue.”

As noted by Bloomberg, the deal is seen as unexpected in many circles because the two brands weren’t seen as obvious partners. However, Whole Foods had been under pressure recently to find a buyer, according to Bloomberg, after activist investor Jana Partners LLC acquired a stake and began pushing for a deal.

“Jana’s move irked Mackey, who has referred to Whole Foods as his ‘baby,'” Bloomberg reporters Nick Turner and Selina Wang wrote. “By enlisting Amazon, he gets to keep his job.”

Though its commitment to delivering organic – and higher-priced – food to consumers has become particularly fashionable over the past two decades, Whole Foods’ roots stretch back to 1978. On paper, at least, it hardly looked like a candidate for acquisition: in 2016 alone the company reported sales of approximately $16 billion.

That said, this move isn’t the first indication that Amazon plans to enter the bricks-and-mortar retail space: Late last year the company opened a cashier-free grocery store that invited Amazon employees to enter, pick up the items of their choice and leave while being automatically charged on their credit cards.

It has yet to open to the public, because the technology behind the store has difficulty tracking more than 20 customers at once.

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Jim Love, Chief Content Officer, IT World Canada

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Eric Emin Wood
Eric Emin Wood
Former editor of ITBusiness.ca turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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