Amazon to buy Whole Foods for $13.7 billion in an all-cash deal

Amazon, the e-commerce giant, has today announced that it has agreed to buy Whole Foods for a whooping $13.7 billion in an all-cash deal. Reports suggests that Amazon agreed to pay $42 a share in cash for the organic-food chain, including debt.

The deal is subject to approval of Whole Foods shareholders and regulators, and is expected to close in the second half of 2017. With this acquisition, Amazon is all set to completely change the online retail and bricks and mortar landscape.

In a statement, Jeff Bezos, Amazon founder and chief executive, said:

Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. 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.

Post acquisition, Whole Foods will continue to operate stores under its brand and will use its same vendors and partners around the world. John Mackey will also remain chief executive of Whole Foods the company’s headquarters will still be in Austin.

With this, Amazon will now have access to Whole Foods’ network of around 430 bricks and mortar locations. Its fair to assume that Amazon will try to recast Whole Foods’ ailing business, starting with upgraded technology.

With Whole Foods shares now trading around Amazon’s offer price, investors appear to be speculating that another suitor could make a play for the grocery chain. Among those that could potentially make a bid are Wal-Mart, which has been focusing its deal making on bulking up its digital business.

Amazon has been pushing to expand its online grocery business, seeing it as an emerging opportunity. According to Cowen and Company, about 12 percent of U.S. grocery shoppers bought their groceries online at some point in 2016.

Earlier this year, Amazon launched a notable bricks-and-mortar experiment — a convenience store in Seattle called Amazon Go, which uses a combination of sensors and cameras to automatically keep track of the items shoppers pick, and letting them simply walk out of stores without the need for cashiers.

If the Amazon’s offer for the acquisition of Whole Foods gets approved, it could be a threat to many grocery delivery startups. This transaction can help Amazon sideline Instacart, a startup that has delivered grocery orders from Whole Foods stores, and is among the leading startup in this space, with a valuation of $3.4 billion.