Amazon.com’s $13.7 billion acquisition of Austin-based Whole Foods Market will officially close on Monday, the companies said Thursday, while also announcing that prices will immediately be lowered at Whole Foods stores and that Amazon’s Prime program will soon be integrated.
The closing will bring to and end Whole Foods’ 39-year run as an independent company.
As one of Austin’s most successful startup stories that began with a single store on North Lamar Boulevard in 1980, Whole Foods will officially become a part of the Amazon empire, a more than $470 billion company that will take over Whole Foods’ more than 460 stores throughout the United States, Canada and the United Kingdom.
"It's been our mission for 39 years at Whole Foods Market to bring the highest quality food to our customers," Whole Foods CEO John Mackey said in a written statement. "By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market's high-quality, natural and organic food. As part of our commitment to quality, we'll continue to expand our efforts to support and promote local products and suppliers. We can't wait to start showing customers what's possible when Whole Foods Market and Amazon innovate together."
News of the closing date came a day after Whole Foods shareholders voted to approve the deal at the company’s headquarters in downtown Austin, and the Federal Trade Commission said it would no longer be investigating the merger, which essentially cleared it to be closed.
Amazon’s impact will be immediately seen. Beginning Monday, prices for some of Whole Foods best-selling items, such as the Whole Trade bananas, organic avocados and organic eggs, will be lowered, the companies said. Neither company described how much the prices would be slashed.
Amazon Prime, which costs $99 per year and provides faster shipping times, a video streaming service and other offerings, will also become Whole Foods’ customer rewards program, with the companies saying Prime members will receive special savings and in-store benefits.
Beyond that, the companies said that “Amazon lockers” will be available in select Whole Foods stores, where customers will be able to have products shipped from Amazon.com to their local Whole Foods store. Whole Foods’ original products, such as its 365 Every Day Value brand, will be available through Amazon’s different online platforms.
"We will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a written statement.
Amazon’s decision to drop prices and use its Prime program at Whole Foods matches what some market analysts had predicted the company would do. Analysts and consumers are awaiting what else might happen as Amazon uses its online power with its now major brick-and-mortar presence. Amazon will also add Whole Foods’ roughly 87,000 employees to its workforce.
“This is just the beginning,” the companies said in a news release. “Amazon and Whole Foods Market plan to offer more in-store benefits and lower prices for customers over time as the two companies integrate logistics and point-of-sale and merchandising systems.”
Upon news of the deal’s closing date, stocks for some of the country’s major grocery chains dropped. Kroger and Sprouts Market both saw a more than 6.5 percent drop Thursday afternoon while Walmart, the nation’s largest grocery chain, saw a more than 2 percent drop.
Walmart and Google announced Wednesday that Google will start offering Walmart products on Google Express, the company’s online shopping mall. It’s the first time Walmart has made its products available online in the U.S. outside of the company’s own website, a move that analysts saw as a response to the growing threat of Amazon to Walmart and Google.
Amazon and Whole Foods announced their agreement on June 16. The two companies began talks about two months before then after Whole Foods representatives first contacted Amazon. Other companies such as Albertson’s had reportedly been interested in acquiring Whole Foods as well.
Before the deal, Whole Foods had experienced sluggish sales and been pressured by some of its major stockholders to seek changes. The grocer has seen several fiscal quarters of declining same-store sales and a drop in profits as it’s struggled to adapt to competition from other grocery chains and online retailers. It’s also had difficulty shedding its “Whole Paycheck” image.
Whole Foods shareholders are set to receive $42 per share in the sale. Amazon reiterated Thursday that Whole Foods stores will keep their names, and said CEO John Mackey will be retained and that the company’s headquarters will stay in Austin. Some market analysts, including Brian Yarbrough with the investment firm Edward Jones, have said they expect the rest of Whole Foods’ executive team to leave based on golden parachute compensation plans the grocer released through a U.S. Securities and Exchange filing after the deal was announced.
At the meeting on Wednesday when shareholders approved the deal, Mackey told shareholders that Amazon’s plans for the grocer after the deal’s closing would be a “surprise.”
He also alluded to the sale of Whole Foods as being bitter-sweet, joking that that selling the company he co-founded and grew into one of the most innovative grocery brands in the world to Amazon was like marrying off a daughter.
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