Mergers & Acquisitions

Amazon To Buy Whole Foods

The all-cash transaction is worth about $13.7 billion, including Whole Foods’ debt.
William SprouseJune 16, 2017
Amazon To Buy Whole Foods announced its largest deal ever on Friday, reaching an agreement to buy Whole Foods Market for $42 per share. The all-cash transaction is worth about $13.7 billion, including Whole Foods’ debt. Under the terms of the deal, John Mackey would remain CEO of Whole Foods, according to a report from MarketWatch.

The $42-per-share offer from Amazon represents a premium of 27% to Whole Foods’ closing price on Thursday. The deal values Whole Foods at roughly 10.5 times its expected 2018 EBITDA.

Activist investor Jana Partners has been pushing Whole Foods to find a buyer since building a stake in the company earlier this year. CEO John Mackey has called Jana executives “greedy bastards” and compared them to the “ringwraiths” from J.R.R. Tolkien’s fantasy novels, according to a story from Texas Monthly.

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“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,” Mackey said in a statement.

Mackey has referred to Whole Foods as his “baby.”

Shares of Amazon have risen 34.4% in the past year, while Whole Foods shares were up 7.3% for the year (about 10% below the performance of the S&P 500) before skyrocketing when the deal was announced on Friday.

“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 CEO Jeff Bezos said in a statement.

The company’s headquarters will remain in Austin, Texas, and the grocery store chain will continue operating under the Whole Foods name.

Amazon’s acquisition of Whole Foods ranks as the 11th biggest global retail deal of all time and the fourth largest U.S. retail deal, according to Thomson Reuters.

The companies said they expect the transaction to close in the second half of 2017.