Online retail giant Amazon.com last year considered making a takeover bid for Austin-based Whole Foods Market Inc., but decided not to pursue a deal, Bloomberg news service reported, citing unnamed sources.
Citing a person with knowledge of the situation, Bloomberg reports that Amazon considered whether Whole Foods would help invigorate its push into groceries, but that the discussions never turned into a concrete plan.
Founded in Austin in 1978, Whole Foods is one of Austin’s best-known companies, with 462 stores worldwide and 87,000 employees.
Amazon is already in the grocery business, to a limited extent, with features such as its AmazonFresh service in certain markets. It’s also been experimenting with a convenience store of the future in Seattle, its home base, where there are no cashiers – instead, special technology tallies everything up as you shop.
Acquiring Whole Foods would have given Amazon a new foothold into the lucrative, but highly competitive, grocery game, providing it with brick-and-mortar stores and distribution centers, plus improved access to key vendors.
It would have come at a steep cost, though. Whole Foods is valued at almost $11 billion – 10 times Amazon’s biggest purchase to date, online shoe retailer Zappos. Zappos sold for $1.2 billion in 2009.
The Bloomberg report comes on the heels of Jana Partners LLC, now one of the biggest investors in Whole Foods Market, saying publicly that it wants the company to consider a variety of potential changes — including a possible sale.
Aside from Amazon, Jana’s list of potential suitors includes mainstream grocers Kroger and Albertsons, according to published reports.
Spokespeople for Amazon, Kroger and Albertsons declined comment on a possible acquisition.
Publix, a Florida-based chain, is another name that has been mentioned in the past as a possible Whole Foods suitor.
A number of factors, including intensified competition, have hit the Austin-based Whole Foods hard, leading to struggles in recent quarters. A March report from a Barclays analyst, for instance, suggested Whole Foods had lost 14 million customers since 2015 — many of them to Kroger, which has stepped up its organic offerings.
Jana Partners, which owns about 9 percent of Whole Foods stock, said in a securities filing Monday that, essentially, enough is enough. Other smaller investors also signed off on the filing, where Jana Partners, which says it has “substantial experience analyzing and investing in the grocery sector,” describes Whole Foods stock as “undervalued.”
Still, despite its issues, Edward Jones analyst Brian Yarbrough, who follows Whole Foods, told Bloomberg he believes the company could be an attractive acquisition target.
“They’ve struggled, but it’s a strong brand,” he said.