Amazon‘s offer to acquire Whole Foods for $42 per share wasn’t Jeff Bezos‘ first, according to new details revealed in a proxy statement filed by the grocery chain with the Securities and Exchange Commission Friday.
In fact, it was more than what Amazon wanted to pay.
Whole Foods said it received an initial written offer on May 23 from Amazon to acquire the supermarket company for $41 per share. Amazon told Whole Foods its offer represented “compelling” value for shareholders, and it viewed this proposed transaction as a “strategic investment” for Amazon.com.
The grocery chain was already fielding other potential deals, including approaches by four private equity firms and two unnamed companies identified only as “Company X” and “Company Y.”
Whole Foods wasn’t satisfied with Amazon’s initial offer.
After discussing potential responses to Amazon at a board meeting on May 30, Whole Foods directors decided to make a counter proposal at a higher price — $45 per share. This offer was communicated later that day to Goldman Sachs, which was acting as Amazon’s financial advisor. The bankers didn’t like it.
“The Goldman Sachs representatives expressed their disappointment at the price specified in [Whole Foods’] counter proposal as they had previously informed … that Amazon.com believed that it had made a very strong bid,” according to the chain of events described in Friday’s filing.
Then there was a bit of brinksmanship. Goldman Sachs, acting as Amazon’s go-between, told Whole Foods the e-commerce giant was “considering other opportunities instead of acquiring” Whole Foods and was debating whether or not to respond to their counterproposal at all.
Nonetheless, “as a last stretch,” Amazon was willing to offer Whole Foods $42 per share, the proxy statement revealed. This was Amazon’s “best and final offer.”
Since the announcement of the Amazon-Whole Foods deal on June 16, shares of Whole Foods have trimmed back their initial gains, falling for the first time Wednesday below Amazon’s $42 bid price.
Whole Foods’ stock surged past Amazon’s offer price almost immediately after the deal was announced because investors speculated that a sweeter offer would be made. In recent weeks, the gap between Whole Foods’ stock price and Amazon’s offer have narrowed, with a rival bid yet to surface.
Friday’s filing revealed that Amazon wasn’t the first to approach Whole Foods. On April 18, the board received a letter from Company X, an “industry participant,” asking if they’d like to explore strategic opportunities. Then, in early May, they were approached by a second company.
In between, and around the time they had begun to talk to Amazon, Whole Foods received inquiries from four private equity firms.
A week before Amazon sent its first written offer, Whole Foods said it arranged a meeting with Company X, and representatives from both parties met in person two days later. At that meeting, Company X suggested a merger-of-equals that would potentially be valued around $35 to $40 a share.
Meeting on May 30 to discuss their options, Whole Foods directors were told by their financial advisors at Evercore that Amazon’s price likely exceeded what a private equity buyer could pay.
By June 1, Whole Foods said it was “willing to move forward to negotiate” a deal with Amazon at the $42 per share price tag.
This is a developing story. Please check back for updates
Source: Tech CNBC
Deal drama: Amazon raised bid, beat out 6 other suitors to land Whole Foods, filing reveals