Well, that’s one way to snooker angry activist investors.
Under pressure from hedge fund Jana Partners to make changes to its board, organic supermarket chain Whole Foods Market Inc (NASDAQ:WFM) has instead succumbed to an offer from online retail bully Amazon.com Inc (NASDAQ:AMZN).
Worth US$42 a share, the Amazon offer was made at a 27% premium to Thursday’s closing price of Whole Foods’ stock.
Naturally, the equivalent of whatever an ambulance chasing legal firm is in the stock market world immediately started bleating that Amazon should be paying more.
“Whole Foods shareholders will only receive $42.00 per Whole Foods share owned. The consideration is significantly lower than at least one analyst’s estimated value of $47.00 per share,” noted The Briscoe Law Firm, as it called for disgruntled shareholders (both of them) to contact the firm to see whether Amazon could be compelled to pay more.
(Note: Other opportunistic law firms are making similar offers)
If some Whole Foods shareholders are miffed at Amazon launching a takeover bid, it is fair to say that shareholders of Whole Foods’ rivals are even more annoyed, as the share prices of most food retailers took a battering on the news of Amazon’s audacious move.
Having access to Amazon’s infrastructure and buying power is sure to boost the margins of Whole Foods, enabling it, perhaps, to cut prices.
Not sure I like this. Feels like Amazon has too much control of pricing already. #Amazon #wholefoods https://t.co/YxP40Wvrlr
— Christopher❄️ (@cwebbonline) June 16, 2017
Armed with Amazon’s fearsome analytics, the organic supermarket chain may also be able to respond more quickly to changing market trends.
Whole Amazon. #wholefoods #amazon pic.twitter.com/Ss6Dt9IfKy
— Tracy Lee | ladyleet (@ladyleet) June 16, 2017
Who knows? Maybe Amazon will introduced a 21st century version of the grocery delivery boy/girl?
Whole Foods and Amazon awesome. We'll get farm to drone dairy delivered now. #Amazon #WholeFoods
— Kenneth Yovanov (@YeahKenny) June 16, 2017
Either way, the general consensus is that the gloves are now well and truly off in the supermarket world.
This could be good news for consumers, in terms of cheaper prices, although history tends to suggest that when consumers enjoy rock-bottom prices, workers somewhere down the production line are paying for it.
Whole Foods Market will continue to operate stores under the Whole Foods Market brand and source from trusted vendors and partners around the world.
John Mackey will remain as chief executive officer of Whole Foods Market, and the retailer’s headquarters will stay in Austin, Texas.
So, in some respects, business as usual - for Whole Foods.
For the rest of the sector? Well,. as Chris Beauchamp of spread betting firm IG Group pungently put it: “Amazon doesn’t so much park its tanks on a sector’s lawn as crash them through the store frontage.”