Amazon snaps up Whole Foods in fresh deal estimated at $13.7bn

Amazon snaps up Wholefoods in fresh deal estimated at $13.7bn

Amazon is to acquire natural and organic retailer Whole Foods Market in a deal estimated at $13.7bn.

Whole Foods' chief executive ​John Mackey will remain in his position, while Whole Foods Market’s headquarters will stay in Austin, Texas rather than moving to Amazon's HQ in Seattle.

The company will sit under Amazon's umbrella but its stores will continue to operate under the Whole Foods Market brand, with the grocer reassuring customers that the way it sources its products will remain unchanged.

The move comes as Amazon has been firming out its grocery ambitions. In the UK the e-commerce giant has teamed up with one of the coutry's 'big four' supermarket Morrisons to let customers purchase fresh and frozen products direct.

The business also also unveiled AmazonFresh last year – a food delivery service available exclusively for Prime members, which is being tested and rolled out in both the US and Britain. Bricks and mortar store, Amazon Go, meanwhile, was launched in December with the firm promising "a new kind of store with no checkout required."

Amazon snapped up Whole Foods for $42 per-share in a deal valued at around $13.7bn – a figure which includes Whole Foods Market’s net debt.

Jeff Bezos, Amazon founder and chief executive, said of the purchase: "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."

Completion of the transaction is subject to approval by Whole Foods Market's shareholders, regulatory approvals and other closing conditions, but it is expected to be finalised by the second half of the year.

Maria Prados, who leads global retail and global e-commerce at payment firm Worldpay said the deal sent out a clear signal about Amazon's intention to disrupt the international grocery industry.

Pointing to the internet behemoth's Dash buy button, a "one-press" way for shoppers to order supplies of everyday items from over 150 brands like Andrex, Ariel and Pedigree, she says it's clear the company has been taking significant steps to build its position in the grocery sector, adding: "investing in a physical presence could be the key to Amazon’s success in this space."

She continued: "We have reached a tipping point in the evolution of the UK grocery market, and it will be interesting to see whether Amazon will continue to focus on their culture of convenience and reliability, or whether they will end up creating a whole new online shopping experience, taking the chore out of the weekly shop."

Rebecca Stewart

Rebecca Stewart is a reporter at The Drum. Based in London, she writes news, analysis and features around brand marketing and digital innovation. She has interviewed key figures from the likes of Airbnb, Amnesty International, Unilever, Facebook and Spotify, as well as covering international events like Ad Week Europe, Dmexco and Ciclope.

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