Amazon is buying Whole Foods Market, for $42 per share in a deal that values the grocery outlet at $US13.7 billion.
The acquisition is seen as a move by Amazon to more aggressively target the grocery section of retail has proven more stubbornly resistant to digital channels.
Whole Foods Market will still run physical stores under its own brand so the deal seems more about bringing Amazon’s scale and expertise – especially in analytics – to bare.
According to Jeff Bezos, Amazon founder and CEO, “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy. 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.”
For his part John Mackey, Whole Foods Market co-founder and CEO said “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.”
Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world. John Mackey will remain as CEO of Whole Foods Market and Whole Foods Market’s headquarters will stay in Austin, Texas.
The deal is set to be Amazon’s largest acquisition of all time by over 10x, according to an analysis from CB Insights. Prior to the Whole Foods acquisition, Amazon’s largest purchase was of e-commerce platform Zappos in 2009, for $1.2 billion; below that ranks its 2014 acquisition of gaming video platform Twitch for $970 million.
Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions. The parties expect to close the transaction during the second half of 2017.
Walmart’s hungry for ecommerce acquisitions
Walmart has also been in acquisition mode, announcing on Friday that it will acquire mens apparel brand Bonobos for $310 million in cash. Bonobos began life in 2007 as a pure play online retailer and later opened a series of ‘Guideshops’ where consumers could try on its clothes before buying online.
Since its $3 billion acquisition of Jet.com last year, Walmart has been aggressively building on its e-commerce capabilities to compete with Amazon. This year Walmart has acquired a number of ecommerce businesses including womenswear retailer ModCloth, outdoor brand MooseJaw and shoeBuy.com.
In its most recent quarter, Walmart saw 63 per cent growth in US e-commerce sales, the majority coming from organic growth in Walmart.com.
The Bonobos acquisition, which is subject to regulatory approval, is expected to close toward the end of the second quarter or the beginning of the third quarter of this fiscal year.
Following the closing, Andy Dunn, founder and CEO of Bonobos will report to Marc Lore, president and CEO of Walmart US. e-commerce, and oversee the company’s collection of digitally-native vertical brands.
“We’re seeing momentum in the business as we expand our value proposition with customers and it’s incredible to see how fast we’re moving,” said Lore.
“Adding innovators like Andy will continue to help us shape the future of Walmart, and the future of retail. I’m thrilled to welcome Andy and the entire Bonobos team. They’ve created an amazing product and customer experience, and that will not change. In fact, Andy will be a great influence on the company, especially in leading our collection of exclusive brands offered online.”