Amazon Is Buying Whole Foods
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NEW YORK (CBSMiami/AP) — Amazon is adding the grocery game to its ever expanding markets of goods, services, and entertainment.
The online giant has announced that it is buying Whole Foods in a deal valued at about $13.7 billion.
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.
The grocery chain, known for its organic options, had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's.
Amazon.com Inc. will pay $42 per share for Whole Foods Market Inc., including debt. That marks an 18 percent premium to Whole Foods' closing price on Thursday.
Whole Foods stock surged 26% on news of the Amazon deal; Walmart and other retailers dropped sharply.
Whole Foods will keep operating stores under its name and John Mackey will as CEO, with headquarters in Austin, Texas.
The company, founded in 1978, has struggled to differentiate itself as competitors also now offer a plethora of fresh and organic foods, and has said customers may be choosing "good enough" alternatives closer to home. In addition to other natural and organic grocers, it has cited pressure from restaurant chains, meal-delivery companies and traditional supermarkets such as Kroger.
The deal is expected to close in the second half of 2017.
(© Copyright 2017 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)
