Amazon Buying Whole Foods, Making Strong Move into Groceries

FILE – In this May 9, 2007 file photo, customers are seen outside a Whole Foods Market in Dallas. Online juggernaut Amazon announced Friday, June 16, 2017, that it is buying Whole Foods in a deal valued at about $13.7 billion, including debt. Inc. will pay $42 per share of Whole Foods Market Inc. AP Photo/LM Otero, file)

(CN) — Amazon is buying Whole Foods in a $13.7 billion deal that sent shock waves through the grocery industry Friday morning, pushing their stocks markedly lower. Inc. will pay $42 per share for Whole Foods Market Inc., including debt, in a dramatic move to extend its reach into groceries.

The deal comes a month after a board shake-up at Whole Foods amid falling sales.

Although Whole Foods made its name by offering consumers organic and healthy options to standard supermarket fare, in recent years it has faced growing competition from Trader Joe’s, Aldi and Earthfare, and the segment is about to get more crowded now that European grocery chain Lidl has announced plans to enter the East Coast U.S. market.

Amazon, meanwhile, has been going toe-to-toe with Wal-Mart, forcing the retail giant to expand its offerings and customer services including curbside pickup of pre-placed orders and home delivery.

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.

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