Dive Brief:
- An analyst from Tigress Financial doesn't believe a competing bid for Whole Foods will come in, according to Barron’s. The natural and organic grocer agreed to a $13.7 billion offer from Amazon back in June.
- As such, Tigress has downgraded the natural grocer’s stock — which has fallen under the $42 purchase price set down by Amazon — from buy to neutral, according to TheStreet.
- Amazon's acquisition of Whole Foods is expected to close by the end of this year.
Dive Insight:
According to Tigress Financial analyst Ivan Feinseth, the Amazon-Whole Foods transaction is a done deal. Despite what seemed like potential interest from some other parties, no one else is likely to come forward with a better offer.
After activist investors Jana Partners took control of 8% of Whole Foods’ stock, it seemed every day brought rumors of potential takeovers. Analysts speculated that Albertsons, Kroger, Target and Walmart, among others, might desire a stake in the company.
According to last month’s proxy filing with the Security and Exchanges Commission, several other companies expressed interested in Whole Foods. Four private equity firms and another retailer — identified in the filing as "Company X" and identified by Reuters as Albertsons — also were interested in buying the retailer for $35-$40 per share.
To many observers, a combination of two grocery entities probably makes more sense, but Whole Foods has more problems than other grocers were willing to deal with. Upon closer look, the SEC proxy filing offers some level-headed business reasoning for the deal, including the fact that Amazon gave the highest share price, that the e-commerce giant offered Whole Foods the best strategic opportunities for the future, and that the two entities' plans for the future dovetail nicely.
Gaining the Federal Trade Commission’s approval looks to be the only obstacle remaining. Some legislators, unions, other grocers and even farmers are raising antitrust issues that could possibly delay or even derail the deal. United Food and Commercial Workers International Union president Marc Perrone said an Amazon-Whole Foods deal could reduce industry jobs and limit consumer choice by putting grocers out of business.
Rhode Island Representative David Cicilline, meanwhile, has requested a hearing to discuss the deal’s impact on the grocery industry and on prices. And Silicon Valley Rep. Ro Khanna is on record saying that federal regulators need to evaluate retail mergers differently these days, considering the impact e-commerce can have on wages, employment and industry innovation.