Whole Foods Shareholder Sues to Block Amazon Merger

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Amazon cuts prices at Whole Foods on Monday

Austin, TX — A Whole Foods Market shareholder is seeking to block the $13.7 billion acquisition by Amazon through a federal lawsuit filed Thursday claiming the deal undervalues the grocer and did not disclose key information, reports 512tech.com

Shareholder Robert Riegel filed the lawsuit in U.S. District Court for the Western District of Texas, according to the site run by the Austin American-Statesman. He requests the court block the acquisition, announced June 16, and seeks class action status.

“The proxy statement states that, in connection with negotiating the merger agreement, Amazon had preliminary discussions with certain Whole Foods executive officers regarding Amazon’s desire to retain such officers following the closing” the suit says. “However, the proxy fails to disclose the timing and nature of all communications regarding the future employment and/or benefits relating to Whole Foods management.”

A Whole Foods spokesperson said in in an email to 512tech.com that the company has “nothing to add” regarding the suit.

After initially receiving an offer from Amazon for $41 per share, Whole Foods countered with an offer of $45 per share before the two sides settled on $42 per share, according to fa July 7 iling  with the U.S. Securities and Exchange Commission. In that filing, it was revealed Amazon CEO Jeff Bezos told Whole Foods CEO John Mackey he would abandon the deal if it were opened to other bidders. The filing also indicated that Mackey made the overtures to Bezos.

On Thursday, Whole Foods shares closed at $41.96 and shareholders have yet to vote on the deal.

Whole Foods had been under pressure from activist investors Jana Partners and Neuberger Berman over sluggish sales.

In May, after closing several underperforming stores, the company replaced almost half of its board of directors while promising to improve technology, centralize its buying and begin a loyalty program at each of its U.S. stores, 512tech.com reports.

As part of the deal, Seattle-based Amazon agreed to keep the Whole Foods name on the stores, and that Mackey would remain as Whole Foods CEO.

Read what WholeFoods Magazine‘s Jay Jacobowitz thinks of the merger.

WholeFoods Magazine has no affiliation with Whole Foods Market.

 

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