Could There Be A Bidding War For Whole Foods Soon?

Despite Amazon announcing it plans this past Friday to buy organic grocery chain Whole Foods for nearly $14 billion, there could be some other bids soon.

According to a Barclays analyst, Karen Short, who also just recently upgraded Whole Foods’ stock to overweight, there could potentially be a bidding war now for the grocery chain.

After raising her price target on Whole Foods from $42 a share to $48, she cited that another buy out bid could be in the works.

The fact that the acquisition would face little regulatory hurdles also helps influence her belief that Whole Foods could even be sold for as high as $57 a share. She wrote in a note to clients, that this is what creates a “very favorable risk/reward.” She also said, “Many will do anything to either make this acquisition more costly…or just prevent the asset from landing in Amazon’s lap, because remember, retail strategic bidders would eliminate overhead at [Whole Foods] in the event of an acquisition, Amazon intends to let Whole Foods operate as is.”

Despite Amazon being a powerhouse and it perhaps being too hard to compete against their bid, Short notes that retailers that sell food and are rivals of Amazon could be the potential bidders “because we think most have too much to lose not to bid.”

She listed Target Corp. and Wal-Mart Stores Inc. among others as potential bidders.

Disclaimer: We have no position in Amazon.com, Inc. (NASDAQ: AMZN) and Whole Foods (NASDAQ: WFM) and have not been
compensated for this article.

Sofia Vida

Sofia has been writing for major news outlets for over 15 years. In her spare time she enjoys hiking, walking her dogs, and going to concerts.

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