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Amazon to buy Whole Foods in an all-cash transaction valued at approximately $13.7 billion and take the retailer into the e-tail fast lane.

PAMPLIN MEDIA GROUP - An Amazon Prime Now employee shops at New Seasons Market for two hour home delivery in Portland.  The hard-driving retailer teamed with eco grocers and cup cake shops for two hour delivery in select zip codes; now it is going the whole hog and buying 400 plus Whole Foods stores. Industry leaders called Friday's announcement by Amazon that it purchased Whole Foods Market a good move that expanded the grocery chain's innovation and reach.

Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at about $13.7 billion, including Whole Foods Market's debt. Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world.

Whole Foods Market is a leading natural and organic foods supermarket and the first national "certified organic" grocer.

"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," said Jeff Bezos, Amazon founder and chief executive officer, of the supermarket that was founded in Austin in 1978.

Lookout Costco, WalMart

John Mackey, Whole Foods Market co-founder and chief executive officer, said, "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."

Amazon has been experimenting with ways to straddle the e-tail, retail divide. For example in 2016 it opened a bookstore in Washington Square Mall selling a limited number of best selling hard copy books, complete with printed out review cards for store clerks and online readers.

New Seasons in Northwest Portland has a special set of shelves where Amazon Prime pickers and packers place bags of groceries ready to be delivered locally in one hour, via Amazon Prime Now. The service includes goods from New Seasons and Uwajimaya, as well as local restaurants. The other fresh produce service Amazon Fresh is not available in Portland.

Brilliant move

Larry Light, co-author with Joan Kiddon of Six Rules for Brand Revitalization and global chief marketing officer of McDonald's from 2002-05, told the Business Tribune, "This was a brilliant combination that rarely occurs in the history of marketing. Usually acquisitions are about financial extraction from a business, but this was a brilliant bypass around Jana, an activist investor." (Whole Foods' Mackey recently told Texas Monthly that Jana Partners were "greedy bastards" who are only interested in making money from a forced sale of the struggling grocer.)

"It's combination of powerful brands with complimentary strengths, it's good for Amazon helping them get a foothold in the traditional retail business, and it's great for whole Foods, bringing Amazon's passionate focus on the customer executed though innovative technology. Jeff Bezos's driving principle is to focus on basic customer retail needs: superior selection, convenience though speed of delivery, and low price."

Light added, "Even customers who love Whole Foods have given it the nickname 'Whole Paycheck.' And Amazon will help that go away."

Whole Foods will use "Amazon's superior inventory management, delivery management, better management of the customer database, and speed of service to checkout."

Mackey will remain CEO of Whole Foods Market and Whole Foods Market's headquarters will stay in Austin.

Completion of the transaction is subject to approval and the parties expect to close the transaction during the second half of 2017.

In fiscal year 2016, Whole Foods had sales of about $16 billion and operated more than 460 stores in the United States, Canada and the United Kingdom. Whole Foods Market employs nearly 87,000 people.


Joseph Gallivan
Reporter

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