Amazon.com Buys Whole Foods for $13.7 Billion
Amazon.com Inc. and Whole Foods Market Inc. announced today they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for approximately $13.7 billion, including Whole Foods Market's debt. Whole Foods Market will continue to operate stores under the Whole Foods Market brand. John Mackey will remain as CEO of Whole Foods Market and will stay in Austin, Texas. Completion of the transaction is subject to approval by Whole Foods Market's shareholders, regulatory approvals and other customary closing conditions, but the parties expect to close the transaction during the second half of 2017. “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 Mackey, in the joint statement with Amazon.
Total Retail’s Take: This incredible move comes as Whole Foods has been under pressure from activist investor Jana Partners and money manager Neuberger Berman, which have called on the grocery chain to sell itself due to its recent poor performance. Amazon, meanwhile, has long been pushing to expand its online grocery business, seeing it as an emerging opportunity for growth. Currently, very few people purchase their groceries online even as more shoppers switch to buying other goods that way. Amazon would like to change that.
The opinions of industry experts and analysts about the merger differ. While some believe Whole Foods is a good compliment to Amazon and will allow it to more aggressively target fresh food delivery to the at-home market, others believe that consumers’ perceptions of the brands are too different (i.e., Amazon is often associated with great value, while Whole Foods has often been called "whole paycheck" due to its higher priced organic goods). It will be interesting to see how Amazon brings Whole Foods into the fold, and what will happen to the entire supermarket space as a result of the deal.