News that e-commerce giant Amazon.com is buying Whole Foods sent grocery stocks reeling Friday.

Amazon said it would buy the natural and organic foods supermarket chain for $42 per share in an all-cash deal valued at about $13.7 billion. The deal is expected to close in the second half of this year.

Following the announcement, Amazon's stock rose 3 percent as Whole Foods shares skyrocketed 28 percent.

Meanwhile, shares of large grocery chains dropped following the news, with traditional chains feared by Wall Street as being in trouble by Jeff Bezos' powerhouse play.

Kroger sank 14.5 percent, Supervalu plummeted 17 percent, fell 7 percent, Sprouts Farmers skidded 12.7 percent, and dropped more than 15 percent.

Big-box retailers weren't immune from the Amazon effect, either.

Discount retailers Target and Wal-Mart also fell after the deal's announcement. Target was down 10 percent, while Wal-Mart was down around 7 percent at one point.

European grocers, including Sainsbury and Tesco, also sank on the deal announcement. Amazon announcement came as unexpected by many who follow the companies.

"The consolidation of [Amazon and Whole Foods] is likely to accelerate the trend we have already seen among Millennial consumers who have rejected traditional Big Food brands in favor of more authentic, trendy offerings," Credit Suisse analyst Robert Moskow wrote in a note to clients.