Amazon to Acquire Whole Foods for $13.7 Billion

PARSIPPANY — Amazon.com will acquire Whole Foods Market for $13.7 billion, a bombshell of a deal that catapults the e-commerce giant into the supermarket business with hundreds of stores across the U.S.

Whole Foods is proposing a new store at future Waterview Marketplace, Route 46 and Waterview Boulevard. The proposed store will occupy 49,000 square feet. The total shopping center will consist of 157,410 square feet and provide 679 parking spots. (Click here to see diagram of proposed shopping center). Meanwhile there is a vacant 65,106 square foot former PathMark Store less than two miles east of the proposed location.

Parsippany Focus contacted Whole Foods corporate office in Austin, Texas, but did not receive a return call.

Amazon agreed to pay $42 a share in cash for the organic-food chain, including debt, a roughly 27 percent premium to the stock price at Thursday’s close. John Mackey, Whole Foods’ outspoken co-founder, will continue to run the business — providing a lifeline to the embattled executive after a fight with activist investor Jana Partners.

The deal sends a shockwave across both the online and brick-and-mortar industries, uniting two brands that weren’t seen as obvious partners. But Whole Foods came under pressure to find a buyer this year after Jana acquired a more than eight percent stake and began pushing for a buyout. Jana’s move irked Mackey, who has referred to Whole Foods as his “baby.” By enlisting Amazon, he gets to keep his job as chief executive officer of the grocery chain.

Whole Foods shares jumped 27 percent to $41.99 as of 10:00 a.m. in New York, bringing them close to the transaction price. Amazon shares gained 3.2 percent to $995.

Five-Minute Delivery?
For Amazon, the deal is more about getting a distribution network for groceries, said Michael Pachter, an analyst at Wedbush Securities Inc. It has spent years trying to break into delivering groceries, but hasn’t been as successful as in other categories.

Amazon previously contemplated a takeover of Whole Foods last fall, but it didn’t pursue a deal, a person with knowledge of the situation has said. The e-commerce company revisited the idea after Jana stepped in.

“Amazon clearly wants to be in grocery, clearly believes a physical presence gives them an advantage,” Pachter said. “I assume the physical presence gives them the ability to distribute other products more locally. So theoretically you could get 5-minute delivery.”

The transaction also may help Amazon sideline Instacart Inc., a startup that has delivered grocery orders from Whole Foods stores in more than 20 states and Washington, D.C.

Amazon’s biggest acquisition announced to date came in 2014, when it agreed to buy video-game service Twitch Interactive Inc. for $970 million in cash, according to data compiled by Bloomberg. The Seattle-based company had about $21.5 billion of cash and equivalents at the end of March, the data show.

“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 Officer Jeff Bezos said in a statement.

The takeover is slated to be completed in the second half of the year, with Whole Foods’ headquarters remaining in Austin, Texas.

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