Amazon is buying Whole Foods for $13.7 billion

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Amazon is buying Whole Foods for $13.7 billion

Amazon (AMZN, Tech30) is making a big bet on physical stores and the business of food.

The online retail giant announced Friday that is buying organic grocery chain Whole Foods(WFM) for $13.7 billion in cash. The deal values Whole Foods at $42 a share, 27% higher than where the stock was trading Thursday.

Amazon said Whole Foods stores will continue operating under that name as a separate unit of the company. Whole Foods CEO John Mackey will stay on to lead Whole Foods, which will keep its headquarters in Austin, Texas.

The deal shows Amazon’s interest in moving into the business of operating traditional brick-and-mortar stores, even as many retailers that have been crippled by Amazon’s growth have announced a series of store closings.

It also shows Amazon’s growing interest in groceries. The company has its own delivery service, AmazonFresh, and is experimenting with a “click and collect” model, offering customers to buy groceries online, then pick them up in person.

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