Amazon Buys Whole Foods Market for $13.7-billion In Cash.

Via the Latimes

The deal’s announcement instantly sparked a selloff in the stocks of other major U.S. supermarket and big-box chains on expectations that Amazon would bring its low-price expertise and technology prowess to bear with Whole Foods, putting further downward pressure on prices in the already hyper-competitive $611-billion U.S. grocery industry.
Amazon said it agreed to pay $42 a share for Austin, Texas-based Whole Foods, which operates 460 stores in the United States, Canada and the United Kingdom, including about 85 in California, its biggest market.
Whole Foods would keep its name under the deal, which is subject to shareholder and regulatory approval and expected to be completed in the second half of this year.

The company also would maintain its Austin headquarters and John Mackey would remain Whole Foods’ chief executive.
Founded in 1976, Whole Foods was a pioneer in selling natural and organic groceries as consumers increasingly sought more nutritious foods. But conventional supermarket chains have been catching up by stocking their aisles with more natural products and often at lower prices than those at Whole Foods.
As a result, Whole Foods’ sales growth and stock price had faltered, and activist investors including Jana Partners, had been pressing for a sale or a shakeup of Whole Foods’ board of directors.
Before Friday, Whole Foods’ stock had tumbled more than 40% from its high in 2013. But Amazon’s offer is a 27% premium to Whole Foods’ closing price of $33.06 a share Thursday.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Amazon Chief Executive Jeff Bezos said in a statement. “They’re doing an amazing job and we want that to continue.”
Seattle-based Amazon, along with rivals such as Wal-Mart Stores Inc., also have been trying to build their online grocery businesses but they remain tiny players so far.

The grocery market is a place where Amazon’s competitors, such as Target and Wal-Mart, have historically had a leg up.
“Everybody’s in the grocery game, so I think the worst mistake would be to try and reinvent what obviously has been successful for Whole Foods," Johnston said.
Whole Foods has about 3.2% of the Southern California grocery sector.