Amazon buys upmarket Whole Foods for $13.7bn

Online giant Amazon has agreed to buy upmarket food store Whole Foods for $13.7bn (£10.7bn) in a deal that puts major supermarkets in the US and UK on notice.

Amazon said it will pay $42 a share for Texas-based Whole Foods in an all-cash deal that includes the group's debt.

Amazon already runs an online grocery store, AmazonFresh, but adding Whole Foods' 460 US, Canadian and UK stores will greatly expand its reach.

The move will add to the pressures on the UK's major supermarkets – Tesco, Sainsbury's, Asda and Morrisons – that have been battling to hold market share against growing discount rivals, led by Aldi and Lidl.

In the US market leader Wal-Mart, and America's second largest grocery player Kroger Co, will take note that Whole Foods is now backed by one of the largest firms in the world.

Whole Foods will continue operating its grocery stores around the country. Co-founder John Mackey will stay on as chief executive and the headquarters will remain in Austin, Texas, where the chain was founded in 1978.

Amazon founder and chief executive Jeff Bezos said: "Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy.

"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."

Whole Foods' Mackey added: "This partnership presents an opportunity to maximise 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."