Industry SectorsConsumer/RetailAmazon swallows Whole Foods in US$13.7bn deal

Amazon swallows Whole Foods in US$13.7bn deal

The online retail giant is making a major move into the traditional retail sector by acquiring a major US supermarket chain.

Online retailer Amazon is moving into the grocery sector, buying the upmarket supermarket chain Whole Foods in a US$13.7bn (£10.7bn) deal that represents US$42 per share and a 27% premium on the group’s most recent share price

Amazon’s founder and chief executive officer (CEO) Jeff Bezos commented: “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.”

Whole Foods’ CEO John Mackey, who is expected to retain his post, said: “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 deal is likely to be completed in the second half of 2017.

The supermarket chain’s sales performance has been weak in recent years and the group has been under pressure from activist investor Jana Partners and money manager Neuberger Berman, to put itself up for sale. The investors criticised Whole Foods’ performance and suggested that management should sound out a potential merger with one of its competitors.

Amazon has been keen to expand its online grocery business, which it regards as a market with strong potential growth. Shopping for food and household items is still relatively limited in comparison to other goods purchased online.

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