Amazon is to acquire upmarket grocery chain Whole Foods Market in a hugely significant move into bricks-and-mortar retailing.

Founded in 1978 in Austin, Texas, Whole Foods Market has acquired a global reputation as the leading natural and organic foods supermarket, with industry-leading levels of product presentation and in-store theatre. In the fiscal year 2016, the company had sales of approximately US$16 billion and has more than 460 stores in the United States, Canada, and the United Kingdom. There are nine stores in the UK, seven in London plus other outlets in Cheltenham and Glasgow.

The definitive merger agreement under which Amazon will acquire Whole Foods Market is worth $42 per share, in an all-cash transaction valued at approximately $13.7 billion, including Whole Foods Market’s net debt. Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from its usual supply partners. John Mackey will remain as ceo and the retailer’s headquarters will stay in Austin, Texas.

Completion of the transaction is subject to approval by market regulators and Whole Foods Market’s shareholders, but the parties expect to close the transaction during the second half of 2017.

Amazon founder and ceo 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.”

John Mackey, Whole Foods Market co-founder and ceo, added: “This partnership presents an opportunity to maximize 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.”