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Amazon to Acquire Whole Foods for $13 Billion

Amazon to acquire US grocery retailer Whole Foods for $US13.7 billion. Whole Foods shares jumped 27% to $41.99 in New York, bringing them close to the transaction price. Amazon shares gained 3.2% to $995. 

The company has agreed to pay $42 a share in cash for the organic food chain, including debt a roughly 27% premium to the stock price. Whole Foods co-founder, John Mackey will continue to run the business. 

The transaction also may help Amazon sideline Instacart Inc, a start-up that has delivered grocery orders from Whole Foods stores in more than 20 states and Washington, D.C. 

The bid signals Amazon's growing intent to dominate groceries and raises risks for Australian retailers ahead of its local launch. Its latest acquisition, which is the biggest in Amazon's 20-year history and gives it a significant bricks and mortar presence, may alter the company's plans for its Australian retail launch, which it confirmed in April.  

The deal is subject to approval by Whole Foods shareholders. The upscale grocer has 460 stores in some of North America's most desirable locations. The two companies said Amazon would continue to operate these stores under the Whole Foods brand.

 

Amazon previously contemplated a takeover of Whole Foods last fall but it didn’t pursue a deal. The e-commerce company revisited the idea after Jana Patners one of the executive investor stepped in.

The deal is more about getting a distribution network for groceries. It has spent years trying to break into delivering groceries but hasn’t been as successful as in other categories. 

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