Executive Summary

• Amazon announced the signing of a definitive agreement to acquire Whole Foods Market, including the company’s net debt, for $13.7 billion in cash. The transaction is expected to close in the second half of 2017.
• Whole Foods, founded in 1978, is the leading natural and organic foods supermarket, with sales of approximately $15.7 billion in fiscal year 2016. The company has more than 460 stores in the US, Canada and the UK.
• The two companies’ statement included few details. Whole Foods CEO John Mackey said that the deal represents an opportunity for Whole Foods to maximize value for shareholders while “extending [its] mission and bringing the highest quality, experience, convenience and innovation to [its] customers.” Whole Foods will continue to operate under its own brand and Mackey will remain with the company.
• Amazon’s grocery sales were estimated at $350 million in the first quarter of 2017, representing an annual run rate of $1.4 billion.
• As the acquisition has not yet closed, we can only speculate regarding Amazon’s plans for combining the Whole Foods stores with its own AmazonFresh service, using the stores as distribution hubs to expand its Prime Now service and integrating the technology currently being tested in its Seattle Amazon Go store.