Slashdot Mirror
Amazon Threatened To Kill Its Whole Foods Deal if the Grocer Started a Bidding War (recode.net)
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.
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.
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.
An unexpected situation will arise from this deal. I am thinking it will not be good. At least for the consumer.
Any company can play hardball. Whole Foods could have walked away if they wanted. (but they would have been a fool)
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!
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.
'Amazon's bankers from Goldman Sachs then "stressed several times" that the increase to $42 represented Amazon's "best and final offer."' "Amazon.com expected that the company would not approach other potential bidders while the company was negotiating with Amazon.com." Though I suppose that leaves a lot of details that still need to be settled. Or maybe not, the article doesn't say. Maybe Amazon means "while an offer is on the table".
That worked once! A guy that loses money, to a company that loses money! Who says a company can't be president! Who!
Either negotiate with the guy with deep pockets in good faith or take your chances in the open market. There is no reason why Amazon should agree to be drawn into a bidding war. This is a standard business practice. Whole Foods was also free to choose how to proceed. This is a non-story.
I mean, it's not like Amazon lobbied the government to bring in dozens of other grocery chains from overseas.
The fact that this is somehow a story that made it to Slashdot goes to show how clueless its readers must be to the workings of the real world. This is nothing unusual. In fact its pretty common practice. Entering into talks is a contract of sorts where both agree to the terms. And those terms seldom weigh in favor of the person who needs to be bought, and make no mistake, Whole Foods was in desperate need of being bought.
how is it that the more money they have, the less integrity they display
let's face it, financially speaking, might makes right
the upper class is beyond civility, integrity or the law
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)
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....
Nothing more odious to businesses than free market competition.
Next on Amazon's agenda: stopping employee "poaching".
Eh, things have been going downhill since we went from "communism is so morally intolerable you should go and die fighting it" to "well, if we can make some extra cash from importing Chinese trinkets, it's fine".
Good for Amazon. If Whole Foods had their way, the deal probably would've had to be signed on artisinal gluten-free organic paper, and management would have to have mustaches and commit to a new wholesome fruit-based lifestyle. I for one, welcome our new ruthless corporate overlords.
News for Nerds?
**Life is too short to be serious**
Whole Foods has retail locations, correct? Those has set prices for items too, correct? And which has store hours where I must make purchases then or it's not available to me from them, correct?
So if Whole Foods does this to their customers, I'm not sure why it's such a big deal if the another company does something similar to them.
Amazon's tactics seems pretty standard negotiation techniques in any hardball contract talk. Not sure why they would be "picked on". Whole Foods was free to take any offer if they didn't like Amazon's terms. Whole Foods is not privy to the how or why Amazon negotiates the way it does.
Amazon and Whole Foods engaged in a normal negotiation process..
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?
What is the story here?
Why is it so hard to only have politicians for a few years, then have them go away?
“Investors know it’s monopolistic, that’s why it’s stock price has been so untethered from profits. The market can register a reality that our laws cannot.” - Lina Khan (New America)
This quote just about sums it up.
And if CNN can threaten to doxx somebody who doesn't conform to CNN's standards of behavior, Amazon can certainly threaten to walk away from a buyout.
It was Whole Foods' obligation to get the highest price they could. Unless they have proof that they at least did some sort of timely analysis the management could be liable.
This. I only made that mistake once.
A bidding war you say.. doesn't a bidding war usually involve more than one bidder? Now I may be mistaken as I haven't followed this very closely, and I am assuming that Amazon is the only player here. So under that assumption, Amazon is basically saying.. "if you try to negotiate, we'll walk"? or in layman's terms... take it or leave it, but that's just common business practice.
I bet WF would have taken it as well. It could easily be a hostile takeover for that.
Same here. I have Prime here in Seattle and they guaranteed some day delivery. It took me over a week to get my order.
... on Shark Tank.
It little behooves the best of us to comment on the rest of us.
That's absolutely standard in an exclusive, bilateral deal. They're called no-shop / no-talk provisions.
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
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
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.
This all seems very normal.
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 choose between two flavors of lies.
lucm, indeed.
"No shopping" is a standard component of most unsolicited acquisitions. Nothing unusual at all.