The deal proves Amazon's increasing interest in moving into operating traditional brick-and-mortar stores and its growing focus on groceries.
Amazon.com Inc said Friday it would buy USA organic supermarket chain Whole Foods Market Inc for $13.7 billion, including debt, marking the internet retailer's largest deal and biggest foray into the brick-and-mortar retail sector.
"We want to assure you that Amazon shares Whole Foods Market's deep commitment to quality and customer service". "But grocers have to respond and move faster now".
Jon Hauptman, senior director of retail for grocery consulting firm Willard Bishop in Long Grove, Ill., said e-commerce in the supermarket industry is not highly developed.
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"Sadly, the hard-working men and women who work at Whole Foods now face an uncertain future because the Amazon model for grocery stores ultimately leads to fewer jobs, worse benefits, and more automation", Perrone said.
The market reverberations of the announced deal traveled beyond the retail industry - shares of food companies like Hershey and Campbell Soup slid, too. It seemed unlikely that Instacart would hold on to its agreement to deliver for Whole Foods, soon to be owned by its goliath rival.
It is predicted that Amazon could become the ninth-largest retailer by 2017 and third-largest grocery retailer by 2021.
The online retailer had been experimenting with brick and mortar retailing in recent years, but Whole Foods' sagging stock price provided the opportunity to take over an existing business, rather than build one from the ground up.
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These three have begun offering some of what Whole Foods offers, forcing the supermarket chain to cut prices.
The deal also allows Whole Foods co-founder and CEO John Mackey to remain as head of the company he started.
The $42-per-share, all-cash deal, expected to close later this year, includes Whole Foods' net debt and represents about a 27 percent premium to its closing stock price on Thursday.
Almost $1.5T: Amount spent by Americans on food in a year. Whole Foods was, however, costlier in 1992 as compared to today (keep the times in check) and it has been reducing the prices to keep the sales in check. At some of the Whole Foods 365 locations, the grocer's discounted brand, consumers can use iPads to order food or find a bottle of wine.
Amazon's shares were up 3 percent at $993.40, adding more than $14 billion to its market capitalization.
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