Amazon says it is buying upmarket US grocery chain Whole Foods Market in a deal valued at about $13.7 billion, including debt. The $42 per share offer represents a premium of 27% on the organic food specialist’s shares, pre-market trading of which was halted earlier today.
The deal marks a bold move into the grocery market by Amazon, which first launched its Fresh food delivery service in the US about eight years ago. The online retail giant also launched the service in the UK last year after signing a wholesale deal with Morrisons.
If the deal closes, pending regulatory approval, this would be the biggest acquisition in Amazon’s 23-year existence. At $13.7bn, it’s $12.7bn bigger — more than 14 times — than Amazon’s acquisition of online shoe store Zappos in 2009, then Amazon’s biggest buy, according to data from Thomson Reuters. Amazon also spent around a billion dollars for Twitch, a video game streaming service, in 2014. It was rumoured earlier this week that Amazon was also looking at Slack, the business chat startup, which could command around $9bn.
“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 chief executive. “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.”
John Mackey, Whole Foods Market co-founder and chief executive, added: “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.”
The grocer will continue to operate stores under the Whole Foods Market brand, the companies said. John Mackey will continue as chief executive of Whole Foods, and the company’s headquarters will remain in Austin, Texas. Amazon and Whole Foods expect to close the deal during the second half of 2017.