Updated from 9:18 a.m. ET on Friday, June 16
"Millions of people love Whole Foods Market because they offer the best natural and organic foods and they make it fun to eat healthy," Amazon CEO Jeff Bezos said in a statement on Friday. "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."
The acquisition also gives Amazon the stores it needs to compete with discount retail behemoth Walmart Stores Inc. (WMT - Get Report) , which likely not coincidentally, announced that it bought online apparel company Bonobos.com for $310 million this morning, as well.
John Mackey, Whole Foods Co-Founder and CEO, said the merger "presents an opportunity to maximize value for Whole Foods Market's shareholders."
Whole Foods will retain its current headquarters in Austin, Texas, and Mackey will stay on as CEO.
The company declined to comment.
Moody's Investors Service analyst Charlie O'Shea said this morning that the deal is "transformative...not just for food retail, but for retail in general."
"Implications ripple far beyond the food segment where dominant players like Walmart, Kroger Co. (KO - Get Report) , Costco Wholesale Corp. (COST) and Target Corp. (TGT - Get Report) now have to look over their shoulders at the Amazon train coming down the tracks," O'Shea said.
The announcement comes on the heels of an ongoing activist campaign against Whole Foods brought by Jana Partners, which has been pushing the organic grocer to overhaul its board of directors and sell itself.
Last month, Whole Foods nominated five new board members and appointed Keith Manbeck as its new chief financial officer and Gabrielle Sulzberger to replace long-time Chairman John Elstrott, a move urged by Jana and seen by many as Mackey's ploy to try to save himself from being ousted.
At the time, Barclays analyst Karen Short told TheStreet that the board shakeup was likely not enough to fend off Jana.
"I think [Mackey's] view is that he outsmarted [Jana]," Short said. "I wouldn't make the bet that you outsmarted a highly intelligent investor."
The new board appointees include Ken Hicks, the former chairman, president and CEO of Foot Locker Inc. (FL - Get Report) ; Joe Mansueto, founder and executive chairman of Morningstar Inc. (MORN - Get Report) ; Sharon McCollam, former executive vice president, chief administrative and chief financial officer of Best Buy Co. Inc. (BBY - Get Report) ; Scott Powers, who held leadership positions at State Street Corp. (STT - Get Report) from 2008 to 2015; and Ron Shaich, founder, chairman and CEO of Panera Bread Co. (PNRA) .
Late Friday morning, shares of Amazon rose 2.9% to $992.46%. Whole Foods rose 27% to $41.99.
At the open, shares of Whole Foods rose 27.5% to $42.15.
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