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Amazon, which has been experimenting with grocery offerings, will buy the upscale supermarket for $42 a share.
Founded in 1978 in Texas, Whole Foods was a pioneer of the move towards natural and organic foods.
It has grown to more than 460 stores in the US, Canada and the UK, and employs about 87,000 people globally.
Amazon founder and chief executive 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.”
Whole Foods has been under pressure from investors amid declining same-store sales. Last month, the company named a new chief financial officer and new board members.
In April, activist investor Jana Partners called the firm’s shares undervalued, noting “chronic underperformance”.
The price being paid by Amazon marks a 27% premium to the level Whole Foods’ shares closed at on Thursday.
The takeover deal is expected to be completed in the second half of the year.
Whole Foods boss John Mackey said: “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.”
Mr Mackey is expected to stay on as chief executive.