Amazon buys Austin-based Whole Foods

Whole Foods Market’s 365 in Cedar Park
Whole Foods Market’s 365 in Cedar Park (KXAN Photo/Calily Bien)

AUSTIN (KXAN) — One of Austin’s most prominent home-grown businesses is being bought out by Amazon. On Friday, Amazon announced they were acquiring Whole Foods Market for $42 per share in an all-cash purchase of approximately $13.7 billion.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO in a statement. “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.”

Whole Foods will continue to operate stores under the Whole Foods brand. The CEO of the grocery store chain, John Mackey, will remain as CEO and stay at the Austin headquarters.

“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,” said John Mackey, Whole Foods Marketco-founder and CEO.

When Whole Foods launched in 1978, they were the new kids in town and shook up the grocery store game with their unique and organic offerings. Fast forward to nearly four decades later, the game has gotten harder for the Austin-based company as more stores are stocking its shelves with organic products.

Last month, Whole Foods shook up its board and implemented a cost-cutting plan after seeing sales at established stores fall for seven straight quarters. In the latest quarter, Whole Foods said sales fell 2.8 percent at established locations.

In April, there were reports that Albertson’s was in talks to acquire Whole Foods–that obviously didn’t happen. 

The parties expect to close the transaction during the second half of 2017.

Future of Shopping?

Amazon’s purchase of Whole Foods isn’t out of left field since Amazon is currently testing checkout-free grocery stores. Amazon Go allows shoppers to scan their Amazon app when they enter the store and then sensors register items that shoppers pick up and automatically charge them to the Amazon app.

Cowen & Co. analyst John Blackledge says the new grocery store is just one way that Amazon has been setting its sights on the food and beverage category, a lucrative $795 billion market. It also offers grocery delivery in some markets and Prime Now for last-minute items delivered in one or two hours.

Just this week, Amazon launched its Amazon Wand, a device that will let you quickly add items to your cart where you don’t have to worry about shopping lists or going to the store for items you forgot. Amazon says the item can be used to scan bar codes or you can speak to it to add the items you need.

With additional reporting by the Associated Press

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