Amazon Threatened To Kill Its Whole Foods Deal if the Grocer Started a Bidding War (recode.net) 173
An anonymous reader shares a report: Amazon has long had a reputation as a hard-ball negotiator. It turns out its negotiations with Whole Foods leading up to its $13.7 billion acquisition agreement were no different, according to an SEC filing outlining a timeline of the talks between the two companies. On May 23, Amazon made a written offer to acquire Whole Foods for $41 a share, less than a month after the first meeting between senior executives of the companies, the filing said. Whole Foods came back with a counterproposal of $45 a share, which got Amazon to increase its offer to $42. But Amazon's bankers from Goldman Sachs then "stressed several times" that the increase to $42 represented Amazon's "best and final offer." Amazon's bankers "also made it clear again ... that Amazon.com would disengage from its efforts to acquire the company and pursue other alternatives and initiatives if the $42.00 per share price were not accepted," the filing said, "and that Amazon.com expected that the company would not approach other potential bidders while the company was negotiating with Amazon.com." Amazon also threatened it would walk away if the talks leaked to the press, which they did not. Translation: $42 or nada.
Only works if you've got all the leverage (Score:2)
It's a buyer's market. Amazon could've bought any one of the big grocery chains and the news would've crushed the stocks of all the ones he didn't buy.
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Whole Foods is all about the brand. While this is a recipe for profit, its also fragile as hell. Deep pockets like Amazon could destroy the business by targeting the brand.
So I think Whole Foods simply chose the win-win option instead of the option where they definitely get hurt.
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Same with FOX the last 8 years.
Problem is that "news" is no longer interested in facts.
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Only works if you're commenting on the right article.
Re:Only works if you've got all the leverage (Score:5, Insightful)
It's been willing to challenge the big bully on the block.
You mean: they've been willing to show everyone that they're basically a mouthpiece for the Democrats. If you want to hear biased things you already agree with, that's a good channel for you. Enjoy. But it's not news.
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Yeah, whatever, fuck that. Go to Faux for your own echo chamber. The "news doesn't have to be factual" network.
We can all play this game.
But it's not news.
try again (Score:2)
I don't think a lot of people outside of Fox News employees would say that Fox News is not as biased as CNN. It sure helped that they got rid of some of the nutcases but it's still obviously a conservative media. Overall I find them less smug than liberals but that doesn't mean they're being more neutral.
There isn't really unbiased news out there anymore. Even third-party providers like Facebook are rigging the game. We're not much better informed than the citizens of North Korea, except at least we get to
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You are defending CNN on the basis that its only doing what FOX does. Everybody let that sink in.
This guy apparently likes what FOX does, tho of course he wont admit it.
Stop being retarded.
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So they're flattering him?
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>When Guido shows up saying, "It'd be a real shame if something happened to that brand o' yours."
Wouldn't Guido be making threats about your use of braces for defining scope?
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The chump list. Duh.
Whole food's customers are stupid money. Everybody likes stupid money.
If you have an entry in Whole Foods database, expect Amazon to raise your prices, you obviously _like_ to overpay.
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Great illustration: How much is a list of people like the parent (smug chumps) worth? A fucking fortune, maybe not $14 billion though.
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Every big retailer already buys credit card purchase info, you don't buy a company to get their customer list when their customers pay with credit cards.
I wonder why people pretend to care about this stuff on slashdot even when they obviously don't actually learn any details of how it works. I mean, if you cared, you'd have to know this just from the privacy-related headlines that come up over the years. A person would have to know they don't actually care and didn't pay attention, wouldn't they? Do you?
Re: Only works if you've got all the leverage (Score:2)
Don't go to the closest grocery store then. The closest to me is my local butcher and fishmonger and I can get quality at very low prices. I think I have a Whole Foods near me but nobody I know has ever gone out of their way to go there, I don't even know anyone that's ever been there. It's kind of like Costco for hippies.
We do have the worlds highest rated grocery chain in our area though, even Trader Joe can't get a hold in our market.
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Pretty sure that's a bot.
Re: Only works if you've got all the leverage (Score:2)
That sounds like one of those marketplace sellers from china. Read who is selling it. I wish they had an option to hide all marketplace items and sellers.
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I simply dispute the original claim. It's the kind of mindless snobbery that whole foods feeds on.
Although the term "hamburger" specifically means something and that something is a bit shady really. It's not the sort of term i would expect any informed consumer (foodie or otherwise) to use.
If you really care, you would grab a slab of something and run it through your the sausage grinder attachment on your overpriced stand mixer.
For some things, that's the only option really.
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But the question is, what did Amazon want out of Whole Foods?
I haven't been studying this one much, but my sense is the most compelling thing about Whole Foods would be its size and footprint. While many grocery chains have stores in as many marketable locations as they can, WF has been more selective by necessity, they have about 450 stores in total, big enough to be important, but not so big as to make fundamental change harder or riskier. I'm sure there are a wealth of other reasons, but I bet size was a big factor.
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Amazon wants profitable warehousing and distribution for a wider Prime Fresh Footprint.
they may even be able to make whole foods more profitable.
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Amazon doesn't want Whole Foods. They want their network of refrigerated storage and distribution for Amazon Grocery. Oh, sure, they'll keep calling it Whole foods, but what they really want is the ability to try to kill supermarkets.
Bezos really is Lex Luthor.
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I don't even know if it's about the brand as much as it is about the demographic and the locations.
Re: Only works if you've got all the leverage (Score:1)
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Amazon crushed my Kroger stock by 20% ..... still not happy about that. :(
Hard ball negotiator - he he he (Score:2, Informative)
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acquirers always pay a "control" premium for a variety of reasons.
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Just because some shares trade for $35 doesn't mean all shares do.
Once all the shares offered at $35 are bought up the price goes up. Once all the shares at $36 etc. At some point counter parties might notice and begin front running orders. Some parties holding shares may decide not to sell. A board approved $42 price means everyone's shares get converted to a pile of cash.
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The stock was trading on the open market around $35/share and Amazon spent 20% over retail ($42/share). Seems like Whole Foods "won" the negotiations to me.
That's about normal for this type of buyout. Imagine how the shares would have spiked had word gotten out about an Amazon buyout. Hence Amazon's silence dictum.
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The market price is the lowest price a current holder is willing to accept.
A buy out is the amount the shareholder that wants the most is willing to accept.
Of course it's higher.
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But they have to disclose it with the SEC as soon as they reach a threshold (5 or 10%, can't remember), including their further intentions. So the shares would have spiked as soon as word got out anyway.
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Often there are different classes of stock, and it is not even possible to get 51% control through the open market, even if you bought everything that was put up for sale. Some group of people are sitting on enough higher-quality shares to keep control.
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I think it's too early to say for certain, but I think at the very least a situation will arise from this deal. It is likely that it will either be good or bad for the consumer.
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There is a very unstable situation on the ground that is unfolding very quickly.
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Any company can play hardball. Whole Foods could have walked away if they wanted. (but they would have been a fool)
Kind of like when Yahoo walked away from that Microsoft bid, right? Isn't that news either way?
Those dastards! (Score:1)
What kind of world do we live in where such tactics are permitted. Thank you to whatever click-seeking phony outrage merchant exposed this horrendous state of affairs!
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Re: Those dastards! (Score:2)
Put up, or shut up. (Score:2)
If Whole Foods had a bonafide better offer, they would have taken it.
Not too many players out there with $14B+ to spend on a 20% premium over market price.
Whipping the whole thing up in the press would have created a temporary spike in the share price, probably higher than $42 per share, but it would have been short lived, and people with $14B+ to invest know this.
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Not necessarily... they *could* have been collecting bids from multiple sources and then given all parties a chance to increase their based on the highest offer so far, doing only one round of that before accepting the highest bid.
Not that I think that's what actually happened in this case, however. I think Whole Foods' counteroffer comes solely from the knowledge that Amazon has deep pockets, and they are being, to put it bluntly, greedy. I expect if Amazon seriously thought there was seriously anothe
Amazon,"final offer" means you're not negotiating (Score:1)
AMAZON FOR PRESIDENT IN 2020! (Score:1)
That worked once! A guy that loses money, to a company that loses money! Who says a company can't be president! Who!
Still better than how they treat their employees (Score:1)
I mean, it's not like Amazon lobbied the government to bring in dozens of other grocery chains from overseas.
Really? (Score:5, Interesting)
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They're just having a long extended cry. It will do them good.
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This is nothing unusual.
Well, to be fair, Amazon will have to find a REALLY big frame to put Whole Foods in, and it will take a lot of space on the wall. They'll also have to find just the right person to buy it and it will take a while... the best they could do is $42. Now, if there was some letter or documentation for the provenance it would be worth millions.
No kidding (Score:2)
I am usually pretty supportive of articles, and often argue with the "why is this posted on slashdot" crowd but this is truly non-news. There must be something else dramatically more worthy of the front page. This garbage is taking up space we could have used to discuss the new news on the antikythera device
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Hey, there are plenty of IT weenies here who could learn a thing or two about salary and hours negotiation. Don't overestimate this crowd's business acumen - they often work 30+ hours a week overtime for free.
Re:A bully is a bully (Score:5, Funny)
Bully: Is that a $35 set of headphones you're wearing?
Victim: Yes... [quiver]
Bully: I'll give you $42 for them, or you can just walk away without telling anyone! [Grrr!]
Victim: Erm, okay.
Re:A bully is a bully (Score:4, Insightful)
The lack of response to this gem of a post is revealing. The confected outrage in TFA is ridiculous.
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Here's the problem with that, asshole. The bully and victim in your example did not enter into a negotiation where the victim asked for a higher dollar figure first and the bully just said "No or I'll walk away". Shorter version - you're pulling shit out of your ass.
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That's the best you got?
Do you start your day with a bowl of cornflakes and outrage?
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Thank you for my 1st Laugh Of The Day(tm).
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Ah, but the evilgreedycapitaluses were trying to get $60 for a pair of headphones that was worth $35.
Oh wait. I've lost track. Which evil corporation are we supposed to be rooting against here? Or maybe it's the system. Yeah, that's it.
Ah well, it's just another lazy saturday afternoon, passing time on a website where noone gives a damn about TFA, just letting my line drop where it may, waving with the currents until the flow brings another troll within reach.
So what? (Score:1)
What is the 'issue'? That is, why is this newsworthy? Because it involves Amazon? and/or Whole [paycheck] Foods?
Kudos to WholeFoods directors for trying to get the best price possible. Breakup fees/penalties are typical in acquisitions.
Again. WHY is this newsworthy (I claim it is not)
Ha ha (Score:2)
if you don't give me the red marble you have right away, I will destroy your sand castle you just built in our sand box....
Kids at play - still....
good (Score:2)
Why is this (Score:4, Insightful)
News for Nerds?
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They broke nothing. Whole Foods could solicit other offers if they wanted, just as Amazon could rescind their offer if they did so. Free speech isn't the same as free everything. Whole Foods chose to accept those terms, they didn't have to.
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Are you one of those nuts who thinks free speech means no one can ever stop anyone from speaking? The US constitution bars CONGRESS from making any law abridging free speech. Amazon is free to enter into a negotiation with Whole Foods, and make a stipulation that the deal will be called off if at any point Whole Foods speaks of the deal publicly. Not a single constitutional issue with regards to free speech.
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LOL. The best case scenario here is that you are trolling.
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Look at my id no....
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Because Slashdot thinks nerds are dumb, timid, and prone to kneejerk emotional reactions involving lots of clicks and comments. And that assumption has proven correct on many occasions.
But Trump didn't make any troll-worthy news today and no Silicon Valley douchebags wrote harassment apologies, so this was the best they could do.
Alternate story title for this "news" (Score:5, Insightful)
Re: Alternate story title for this "news" (Score:2)
That's what I was thinking. Must be a slow news day. While Foods needed a buyer more than Amazon needed to buy. Case closed.
This is obvious (Score:1)
If I tell you that my absolute final offer is $42, then of course I'm going to walk away from the deal if you don't agree to it. What part of "Final Offer" isn't clear?
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Attempting to continue negotiating on price would void the $42 offer. This is not necessarily always the case.
Ok. (Score:2)
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Sounds like shareholder lawsuit time (Score:2)
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You keep using that term.... "bidding war" (Score:2)
Mr. Wonderful ... (Score:2)
... on Shark Tank.
Anonymous investment banker here ... (Score:1)
That's absolutely standard in an exclusive, bilateral deal. They're called no-shop / no-talk provisions.
Is it news that Amazon knows how to negotiate? (Score:1)
It sounds as though Amazon knows what it's doing in negotiations. Why is this surprising or even interesting? They negotiated from strength and got the deal they wanted. Whole Foods got paid and won't go bankrupt. It's a win for both sides.
I don't get it (Score:2)