Texas Hill Country News

Amazon Announces $13.7 Billion Purchase of Texas-Based Whole Foods

By  | 

In a stunning move, Amazon has announced that it has agreed to purchase Texas-based Whole Foods Market for $13.7 billion. This strategic buyout is being made to boost its grocery business, despite the fact that the brick-and-mortar retail sector remains mired under the weight of e-commerce.

Amazon Announces $13.7 Billion Purchase of Texas-Based Whole Foods

Photo: Wikimedia

In what has been declared as its largest acquisition to date, the Seattle-based online mecca of retail will pay $42 per share in what’s outlined as an all-cash deal, which is 27% higher than the Thursday close of Whole Foods’ stock price, at $33.06. On the face of what appears to be an uncharacteristic move on the part of Amazon, investors have commended the company on the acquisition. The resulting upward spike of Amazon’s share value by 3.4% to $996.46 in this morning’s trading is a strong indicator of their approval, while other grocery company stocks plummeted (Kroger, Costco, and SuperValu all setting the example.)

Amazon Announces $13.7 Billion Purchase of Texas-Based Whole Foods

Photo: Facebook/NBC Washington

Yet requiring approval by the shareholders of Whole Foods and regulators, the deal is anticipated to be finished in the second half of this year, with the caveat that Amazon has to pay Whole Foods $400 million if it’s not completed. Amazon has experimented with brick-and-mortar operations previously, however not to the extent that this deal entails, which has been recognized as a dramatic departure from its business model.

Amazon Announces $13.7 Billion Purchase of Texas-Based Whole Foods
Photo: Facebook/Mariya Aston

According to KVUE ABC, Whole Foods co-founder and CEO John Mackey stated that he agreed to the deal as “an opportunity to maximize value” for the company’s shareholders. He will remain the company’s CEO. Whole Foods Market will keep its brand name and the company’s headquarters will remain in Austin, here in the Texas Hill Country. Recent dissatisfaction with the company’s lagging sales and plans for turnaround had caused individual investors to take varying steps of recourse, resulting in board restructuring and replacement of its CFO. From the perspective of Amazon, this was a convenient play to get a larger share of the grocery sector, which they had originally began with their AmazonFresh plans. With grocery sales becoming increasingly vital to their ability to sustain its staggering growth rate this is a calculated move to ensure a piece of the $750 billion annual grocery market in America, and analysts see the Whole Foods acquisition as being well-targeted. In turn, Amazon’s strategy may also include the provision of lockers and shipment pickups in Whole Foods locations, which have been strategically placed in more opulent neighborhoods. Their entire plan following the completion of the purchase remains to be seen, but no doubt will cause an industry shakeup.

Page 1 of 2:12