But the market punished other retailers, including Wal-Mart Stores, which lost 4.7 per cent, amid expectations the deal would sharpen price competition in the industry, denting profits.
With Whole Foods, Amazon gets an established business that it can transform through its technology and supply network expertise.
Online retail giant Amazon made a dramatic push into brick-and-mortar retail Friday with the almost $14 billion purchase of Austin-based organic grocery chain Whole Foods Market.
"Just goes to show how competitive the grocery market is and also shows it's moving into more of a digital experience and online presence", said Charlie Dunn of Pyramid Foods, parent company of Ruby's, Price Cutter, and other grocery brands in the area.
The deal comes a month after Whole Foods announced a board shake-up and cost-cutting plan amid falling sales and pressure from activist investor Jana Partners.
The hedge fund said the company was undervalued and needed to overhaul its operations and consider "strategice alternatives", a term usually used to indicate a sale.
Atlas Air Worldwide Holdings Inc.: The May 2016 deal to take up to a 30% stake in Atlas Air for $397.6 million helped Amazon expand its fleet of delivery jets in an effort to reduce its reliance on third-party carriers to speed delivery times. The acquisition would add Whole Foods' 87,000 employees to Amazon's payroll, which as of the end of the first quarter had 351,000 people.
Amazon's deal to purchase Whole Foods was big. The online retailer will pay $42 per share in an all-cash transaction that also includes the supermarket's debt.
But in February, Whole Foods said it no longer saw the potential for expanding its flagship chain to 1,200 locations, up from about 460 in the United States, Canada and the United Kingdom.
"This deal should leave no doubt that Amazon is deadly serious about dominating all aspects of retail", said Paul Cuatrecasas, chief executive of Aquaa Partners, a London-based investment banking firm. Pachter said Amazon might get customers over those fears if they know the delivered items are the same as those they would find at the local store.
Then there's Amazon, the online juggernaut that has turned its gaze to food retailing. Amazon (amzn) shares surged more than $23 Friday, an increase of about 2.4%. Walmart, by comparison, sold 17.3 percent of the country's groceries, while Kroger sold 8.9 percent, according to Bloomberg data. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw.
Johnson, a consultant for the food industry, says other companies have to compete to stay alive.
Although Amazon remained tight-lipped Friday about its plans for the natural and organic food giant, a prototype grocery store the company opened this year in Seattle provides clues to its vision for the future: cashier-less shops where purchases are tallied automatically on an app instead of at a checkout counter.