Amazon buys Whole Foods for $13.7 billion

Wal-Mart Stores Inc.'s stocks fell 7.1% following the news, while Krueger Co. plummeted 17%. Investors worried that the buyout would negatively shake up the entire grocery sector.
By Tyler Henderson | Jun 19, 2017
Online retailer Amazon is making a foray into the brick-and-mortar grocery market with a newly announced deal to buy Whole Foods for $13.7 billion. Amazon announced the deal Thursday, causing tumult in the share values of other grocery chains.

Wal-Mart Stores Inc.'s stocks fell 7.1% following the news, while Krueger Co. plummeted 17%. Investors worried that the buyout would negatively shake up the entire grocery sector.

"This deal should leave no doubt that Amazon is deadly serious about dominating all aspects of retail, " Paul Cuatrecasas, chief executive of London-based investment firm Aquaa Partners, told the Washington Post. "This deal has dramatically flipped the table on traditional companies."

The deal makes Whole Foods one of a growing retinue of businesses that Amazon now owns. In recent years, the e-commerce giant has also acquired the Washington Post newspaper, the data-analytics provider Alexa, audiobooks merchant Audible, and numerous websites and Web-based apps and services, including IMDB.com, Box Office Mojo, Twitch.tv, and Goodreads.

It gave Whole Foods favorable terms to close the deal, as well. John Mackey, the grocery chain's cofounder, will continue to run it. And Amazon agreed to pay $42 a share for the business, amounting to a 27% premium on Whole Foods' stock price at close of business Thursday.

Mackey's future had been in doubt while the negotiations were under way. Jana Partners, a prominent investor in Whole Foods that had pushed for the deal, had also pressed to have Mackey replaced, partly due to Whole Foods' sales, which have been declining as Walmart and other grocery chains enter its market niche of organic and natural products.

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