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Amazon.com, Inc., the world's largest Internet-based retailer, said Friday it will acquire Whole Foods Market Inc., a grocery store chain featuring foods without artificial preservatives, colors, flavors, sweeteners and hydrogenated fats, at a total cost estimated to be 13.7 billion US dollars.

Under a merger agreement between Amazon and Whole Foods, it will be an all-cash transaction, with the former paying the latter 42 dollars per share, a 27 percent premium to its previous closing price, and the latter to continue to operate stores as a subsidiary of Amazon under the Whole Foods Market brand and source from its trusted vendors and partners around the world.

Following the announcement, shares of the e-commerce giant headquartered in Seattle, Washington state, rallied 3 percent while shares of Whole Foods spiked over 27 percent.

"Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy," Jeff Bezos, Amazon founder and chief executive officer (CEO), said in a statement. "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."

Initially an online bookstore as it was launched in 1994, Amazon stands now as the most valuable retailer in the United States by market capitalization, with more than 341,000 employees worldwide. Backed by its express delivery network, it has entered the US grocery market with limited success through its online platform in recent years under a brand name known as AmazonFresh.

John Mackey, Whole Foods co-founder and CEO, said in a statement that "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."

Headquartered in Austin, Texas, Whole Foods was founded in 1978 and now has more than 460 stores with about 87,000 employees in the United States, Canada and Britain.

Mackey will remain as CEO of Whole Foods after the deal closes, and the headquarters of the grocery supermarket chain, now under pressure from fierce competitions, will stay in Austin.

Amazon boasts itself as No. 2 on Fortune's 2017 list of World's Most Admired Companies and Whole Foods as No. 28.

While their merger is subject to approval by Whole Foods' shareholders, regulatory approvals and other customary closing conditions, the two parties expect to close the deal during the second half of 2017.

Shares of other grocery chains took a hit on the news of the deal. Discount retailers Target and Wal-Mart fell 8.06 percent and 5.13 percent, respectively, early Friday. Kroger sank 11.48 percent, while Costco dropped 5.64 percent.