Amazon makes a $13.7B bet on groceries

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Amazon makes a $13.7B bet on groceries


But Amazon’s $13.7-billion deal might not be the last word on the merger itself, according to the Los Angeles Times.

Wall Street signaled Monday that it expects a rival offer for Whole Foods to surface, and many industry and merger experts agreed.

“Highly likely,” said Lloyd Greif, whose investment firm Greif & Co. specializes in mergers and acquisitions but isn’t involved with Whole Foods. Amazon “didn’t put this out of reach for everybody else” in terms of price, he told the Times.

Amazon and Whole Foods Market, Inc. announced Friday that they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion, including Whole Foods Market’s net debt.

“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 CEO. “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.”

Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world. John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market’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,” said John Mackey, Whole Foods Market co-founder and CEO.

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.

Whole Foods has been under pressure from Jana Partners hedge fund and money management firm Neuberger Berman, which have called on Whole Foods to sell itself. The investors have criticized Whole Foods for its poor performance, and have suggested the chain could be merged with another grocer.

Meanwhile Amazon has been pushing to expand its fresh food offerings by launching Amazon Fresh and cashier-less grocery stores in Seattle called Amazon Go.