Sunday 17 December 2017

Amazon to acquire supermarket chain Whole Foods in $13.7bn all-cash deal

Whole Foods currently has 460 stores across the US, Canada and the UK
Whole Foods currently has 460 stores across the US, Canada and the UK

Kalyeena Makortoff

Amazon is to acquire supermarket chain Whole Foods in an all-cash deal worth $13.7bn, in the internet giant's biggest foray into the grocery sector to date.

The companies announced on Friday that Amazon will buy Whole Foods for $42, but will continue to operate stores under the Whole Foods brand.

Whole Foods currently has 460 stores across the US, Canada and the UK.

The deal, which includes Whole Foods Market's net debt, will see John Mackey remain as chief executive of the grocer and maintain its headquarters in Austin, Texas.

Amazon founder and chief executive Jeff Bezos said: "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."

The acquisition ramps up Amazon's stake in the global grocery market following its launch of AmazonFresh, which entered the UK market last year.

The internet giant, which has also teamed up with Morrisons in the UK, has now more than tripled its reach to 260 postcodes across London, Surrey and parts of Hampshire.

Shares in listed British supermarkets tanked on news of the Whole Foods deal, which will likely see further competition in an already crowded sector.

Tesco and Sainsbury's shares sank 3pc, while Morrisons fell by 1.5pc.

Amazon's US-listed shares were up 2.5pc in morning trading, while Whole Foods shares skyrocketed 27pc.

The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales. The grocery store operator was also under pressure from activist investor Jana Partners.

Commenting on the acquisition, Whole Foods chief executive and co-founder John Mackey said: "This partnership presents an opportunity to maximise 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 will still have to pass regulatory and shareholder approval, but is expected to be completed in the second half of 2017.

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