The acquisition will launch the e-commerce giant into hundreds of physical stores and fulfill a long-held goal of selling more groceries to consumers.
Amazon will pay $42 a share in cash for the natural food chain, the company said. Under the agreement, Whole Foods cofounder and chief executive officer John Mackey will continue to run the business.
The deal sent shock waves through both the online and brick-and-mortar arenas as some grocery and retail chain stocks plunged in the aftermath. Walmart fell 7.1%, while Kroger Co. dropped 17% as many investors worried what this move will mean for an already increasingly competitive industry.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Amazon founder and chief executive officer Jeff Bezos said in a statement. “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.”
Under the agreement, Amazon gains access to a strong brand, a network of 431 upscale stores and an immediate expansion of its distribution network, which could possibly lead to a rapid expansion of the AmazonFresh delivery service. In addition, Amazon can now implement decades’ worth of experiments in just how consumers actually select and pay for groceries and have them delivered.
With this acquisition, there was also some speculation that Amazon may be exploring forays into other retail businesses, including the U.S. pharmacy market. There may be some hints of targeting this area in some of the online retailer’s recent moves. In November, the company rolled out a one-hour delivery service for nonprescription items from Bartell Drugs, a pharmacy chain based in Seattle, as part of its Prime Now offerings.