Online retail giant Amazon has purchased Whole Foods Market, the organic-focused grocery store chain founded in 1978. The purchase price is said to be valued at $13.7 billion, or $42 per share — about $10 more per share than Whole Foods stock was worth as of yesterday. A press release issued by Amazon confirms the all-cash deal, which according to the Wall Street Journal, is expected to close in the latter half of this year. (Update: As of 2 p.m. EST, reports suggest that since the merger is not yet complete a bidding war could ensue; some analysts suspect Whole Foods could be worth more than Amazon’s offer.)
In a recent profile in Texas Monthly, Whole Foods CEO John Mackey, who founded the company when he was 25, seemed disillusioned by investors’ desire to sell.
“Yes, we need to evolve,” he told Texas Monthly. “We need to get better, and we’re doing that. But these guys just want to sell us, because they think they can make forty or fifty percent in a short period of time. They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.”
But Mackey’s quote in Amazon’s release this morning shows he’d changed his tune: “This partnership presents an opportunity to maximize 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.”
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Jeff Bezos, Amazon’s founder and CEO, said in the release. “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.”
Mackey will remain CEO under the new business structure, Whole Foods’s headquarters will remain in Austin, Texas, and Whole Foods Markets will continue to operate under that name, according to the release.
In an email to subscribers Whole Foods promises not to dumb down its mission:
No artificial flavors, colors, preservatives, sweeteners or hydrogenated fats will ever be in any of the food we sell. Meat will still come from animals raised with no-added growth hormones, ever. And all eggs in our dairy cases will continue to come from cage-free hens that aren’t given antibiotics. Those standards are core to Whole Foods Market and we will remain committed to them.
Amazon has been sniffing around Whole Foods since at least April when activist investor group Jana Partners bought 9 percent of the company and suggested that Mackey’s concept could benefit from a sale. Whole Foods had been struggling in recent years, faced with competition from other retailers and a poor reputation for selling overpriced but ostensibly health snacks like asparagus water. The company seemed to be leaning into its prepared foods business, and designing at least some locations to look more like restaurants than grocery stores.
Meanwhile, Amazon — which was founded in 1994 — got into the grocery game. It unveiled online grocery delivery service Amazon Fresh in Seattle in 2008; that service is now available in 16 major cities across the globe. Late last year Amazon launched a small, line- and cashier-free (physical) store called Amazon Go where computer sensors and Amazon’s mobile app allow shoppers to purchase and pick up food while walking through the aisles. In May, Amazon opened two pick-up only grocery store locations, where consumers can pick up groceries they purchased online. Though Whole Foods Markets started to lower its prices and offer grocery delivery in many cities, the chain founded on a pragmatic approach to healthful eating couldn’t compete with Amazon’s prices, technology, or mastery of delivery logistics.