Amazon Inc. (AMZN) is all set to gobble up Whole Food Market (WFM). However, there's a bigger sweetener for the e-commerce giant. Amazon's stock soared close to 3% in the aftermath of the announcement, increasing the company's market cap by nearly $15 billion to $475 billion, essentially equal to the size of the entire deal. This price movement also expanded Bezos' personal wealth by over $2 billion and catapulted him back as the second-richest person in the world with a real-time net worth of $84.4 billion, according to Forbes. (See also: Bezos, Buffett and Ortega Battle it Out for World's Second Richest Man)

The all-cash deal that includes Whole Foods’ net debt, will be executed at $42 a share, pegging the company’s value at $13.7 billion, according to a press release. That presents a 27% premium from its previous close and a 30% premium over its 200-day moving average. Whole Foods stock jumped more than 29% in trade post the announcement after interestingly ending down nearly 6.7% in yesterday’s trading session.

“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,” said John Mackey, Whole Foods Market co-founder and CEO.

Whole Foods, with a market cap of close to $10 billion was ranked 176 in the 2017 Fortune 500 list.

The acquisition would also take Jeff Bezos a step closer to his dream of making Amazon a shopping destination for everything. 

“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,” Bezos said in the release. 

Whole Foods Was Struggling

Competition from the likes of Kroger (KR) and Wal-Mart (WMT) was beginning to take a toll on the retailer, which was making attempts to make its operations more efficient. This competition is only expected to intensify further with advent of German grocery chain Lidl on to U.S. shores.

Whole Foods experimented with many ways to attract and retain investors, including lowering prices. That required cutting costs and the company announced store closures while reporting lower than expected results in February this year. 

The struggling retailer has had an overhaul in its management, including the appointment of a new CFO as recently as last month.

Activist investor Jana Partners disclosed a 7% stake in the company in April this year and that caused some discomfort to the Whole Foods management. CNBC reported that just two days ago, Mackey called Jana Partners “greedy bastards”, interested in the sale of the company.

"They're putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it's in their self-interest to do so," Mackey said in an interview with TexasMonthly.

Whole Foods Shareholders

The company was primarily held by institutional investors. The top 10  shareholders own hold more than 42% of the company's shares. Vanguard Group has the largest stake at 9.66%, followed by Jana Partners. BlackRock Fund Advisors which each hold 4.6%; SSgA Funds Management has 4.55% and Sands Capital Management owns 3.65%. 

What does this mean for Amazon’s competitors?

This is another bout that goes to Amazon in its competition with Wal-Mart. While both retailers have been locked in a price-war, and offering free shipping, this acquisition helps Amazon gain more ground in its rival’s territory. It also gives Amazon, a massive brick-and-mortar presence through more than 300 Whole Foods stores across the country.

Recently, Amazon had announced lower Prime membership rates for lower-income group customers. (See also:Amazon Cuts Prime Fee for Low-income Earners)

Wal-Mart's $310 million acquisition men's wear brand Bonobos was overshadowed and the company's stock fell more than 4.6% fearing stiffer competition from the Amazon-Whole Foods deal. Other grocery retailers too felt the pain with their stocks tumbling sharply in early trade, followed by a very modest recovery though remaining firmly in the red. Kroger stock ended the day with near 10% decline, Costco fell more than 7% whereas Target share price decreased by 5%.

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