Amazon outbid two other companies and four private equity firms in a race to purchase Whole Foods Market, according to a document filed with the U.S. Securities and Exchange Commission last week.
According to the 174-page proxy filing, the organic supermarket chain received a written offer from Amazon on May 23 to acquire the company for $41 per share. In its letter, Amazon said it reserved the right to terminate discussions if news of the deal leaked. The letter also indicated the online retailer viewed the transaction as "a strategic investment for Amazon.com" and one of "compelling" value for Whole Foods' shareholders.
At the time of Amazon's proposal, Whole Foods was fielding offers from companies identified in the document as "Company X" and "Company Y," in addition to four private equity firms. A source close to the matter told Reuters grocery company Albertsons was "Company X." But, days after Amazon's initial bid, Whole Foods responded with a counter-proposal at $45 per share.
Goldman Sachs, which was acting on Amazon's behalf during negotiations, expressed its disappointment in the counter offer and said Amazon was deciding whether or not it should pursue other opportunities. In a last ditch effort, Amazon offered $42 per share, but stressed it would be the "best and final offer." Whole Foods accepted, and after back-and-forth with legal, the deal was finalized June 15 and announced to the public the next day -- Amazon had bought Whole Foods in a deal valued at US$13.7 billion, including debt.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO, in a press release announcing the acquisition. “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.”
News of the acquisition sent stocks of grocery store operators and other companies that compete with Whole Foods plunging. Investors are concerned Amazon will disrupt the grocery industry the same way it has department stores and other brick-and-mortar operations.
Experts feel the deal could accelerate grocery delivery and e-commerce within the Canadian market. Canadians have few options for grocery delivery and Amazon could expand its technology or enhance its online grocery business with the Whole Foods assets, putting intense pressure on the country's supermarket chains.