For some time now, Amazon has long been trying to expand its online grocery business. The online retailer made a big move in that direction today by announcing it will buy Austin-based Whole Foods Market for $13.7 billion .
This all cash transaction, where Amazon agreed to pay $42 per share, is a 27 percent premium over Thursday’s closing stock price. A month ago, Whole Foods announced a board shake-up and cost-cutting plan to aide with slow sales.
The grocery chain, known for its organic options, had been facing increased pressure from rivals, including Aldi, Trader Joe’s and European grocery chain Lidl, which is planning to enter the East Coast market.
With 430 locations, Whole Foods has some of the best locations in the grocery business which is extremely valuable to Amazon which has been slowly growing its brick-and-mortar presence. The expansion will also give the e-commerce giant a supplier network of fresh food.
Whole Foods will keep operating stores under its name, maintain headquarters in Austin Texas, and John Mackey will remain CEO.
“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,” Mackey said in a statement.
photo credit: Mike Mozart under cc