Amazon to buy Whole Foods for $13.7 billion

Nick Turner, Selina Wang, and Spencer Soper, reporting for Bloomberg: Inc. will acquire Whole Foods Market Inc. for $13.7 billion, a bombshell of a deal that catapults the e-commerce giant into hundreds of physical stores and fulfills a long-held goal of selling more groceries.

Amazon agreed to pay $42 a share in cash for the organic-food chain, including debt, a roughly 27 percent premium to the stock price at Thursday’s close. John Mackey, Whole Foods’ outspoken co-founder, will continue to run the business -- a victory after a fight with activist investor Jana Partners that threatened to drive him from power.

If you are a big box grocer, this has to send shivers down your spine. The stock prices of companies like Wal-Mart and Kroger took a nose dive this morning. Whole Foods stock is up around 27 percent at the time this is posting. 

Amazon is already in the home delivery game when it comes to buying groceries. With a chain of stores under its umbrella, you can imagine how much more convenient the process of buying groceries and having them delivered will be.  

This is by far the biggest acquisition Amazon has made, as shown by this chart from Recode:

It will be interesting to see if this is the only play we see Amazon make in the grocery space this year, or if this is just the beginning of a larger effort to become the one stop option for home delivery.