In a dramatic move that promises to shake up the grocery industry, Amazon on Friday announced that it will buy Whole Foods in a $13.7 billion deal.
The deal gives the internet retail giant, which has unrolled a grocery buy-online/home-delivery service in a few major cities, a physical footprint in hundreds of cities across the country.
Whole Foods operates a Wichita store at 13th and Webb.
The companies said in a news release Friday that Amazon will operate the stores under the Whole Foods Market brand. It will continue under co-founder and CEO John Mackey with its headquarters in Austin, Texas.
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The deal is expected to close in the second half of 2017.
But the deal is likely to speed up a reconfiguration of the grocery industry, putting a dent in the operations of existing players. On Friday, the stock price of Kroger, parent of Dillons, dropped 9.2 percent, while Wal-Mart dropped 4.7 percent.
For Whole Foods, the deal represents a chance to fend off pressure from activist investors frustrated by a sluggish stock price. Whole Foods over the past decade led the move into high-quality, organic food, but its growth slowed as traditional grocers responded with similar offerings.
For Amazon, the deal marks an ambitious push into the $670 billion grocery business. There are more than 460 Whole Foods stores in the United States, Canada and the United Kingdom.
The e-commerce giant has been testing a variety of technology-infused retail concepts. It has already made an initial push through AmazonFresh, its grocery delivery service.
Having stores in dozens of cities could allow it to spread AmazonFresh nationwide within a few years.
“The Whole Foods acquisition provides them more physical locations,” said Mikey Vu, a partner at Bain & Co., a consulting firm.
“They’re going to be within an hour or 30 minutes of as many people as possible.”
Under the terms of the proposed deal, Amazon would pay $42 a share for Whole Foods, a 27 percent premium to Thursday’s closing price.