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Amazon announced on Friday that it is acquiring grocery store chain Whole Foods Market for $42 per share -- a total of approximately $13.7 billion in cash.
Whole Foods Market will continue to operate its stores under the same name as a separate unit within Amazon. Co-founder John Mackey will remain as CEO of the company after the deal closes in the second half of this year, and its headquarters will remain in Austin, Texas, where it was founded in 1978. Amazon, which was founded in 1994, is headquartered in Seattle.
The move is a major competitive leap for Amazon, which is up against retailers and delivery services big and small, namely Walmart, in a race to dominate the distribution of consumer goods.
“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 press release. “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."
Amazon, which is known primarily as an ecommerce platform, recently has been investing in brick-and-mortar opportunities. It opened its first physical retail location in Seattle in November 2015. To date, Amazon has opened eight bookstores in seven states and has announced plans for five more. Earlier this year, the company launched a service for Amazon Prime subscribers called AmazonFresh Pickup, which allows customers to order groceries online and drive to one of two locations in Seattle to pick them up at a scheduled time. The company has also detailed plans for a grocery store concept without cashiers called Amazon Go.
Last year, Whole Foods took in about $16 billion in sales. Mackey has recently been in a public battle with Jana Partners, one of the company's investors, whom he recently suggested were "greedy bastards." There are more than 460 Whole Foods stores across the U.S., Canada and the U.K.
Related: Amazon's Brick-and-Mortar Bookstore Is Coming to New York
This morning, Entrepreneur VIP contributor and host of The Top Entrepreneurs podcast Nathan Latka posted a video in which he shared his thoughts on the acquisition. “They do this beautifully,” Latka says of Amazon. “Kill your competitors, and then buy them.”