Whole Foods shares keep rising in bidding war speculation

Mon Jun 19, 2017 4:55pm EDT
 
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By Sinead Carew and David Randall

(Reuters) - Whole Foods Market Inc (WFM.O: Quote) shares added to their gains on Monday after Amazon.com Inc (AMZN.O: Quote) announced plans last week to buy the upscale grocer, with investors betting that rivals could step in to create a bidding war.

Amazon shares also rose as Wall Street analysts lauded the proposed $42-per-share deal and bet that the company would prevail in any bidding battle.

Whole Foods shares rose 1.3 percent on Monday to close at $43.22 - adding to Friday's 29 percent rise and reflecting hopes the company might fetch a higher price. Amazon shares ended up 0.8 percent at $995.17.

“We thought Amazon was thrifty in its offer," said Charles Kantor, managing director at Neuberger Berman Investment Advisers LLC, which owns around 2.7 percent of Whole Foods shares and had pressured the company to take steps to improve its stock price.

Kantor noted that Amazon’s market cap gain roughly equaled the amount the company is paying for Whole Foods.

“I think there’s the argument that Amazon acquired Whole Foods for free," he said. "The reaction of shareholders suggests that Amazon has left themselves lots of room to pay more for this strategic asset."

Some investors suspected other companies were weighing a rival bid.

“Every grocery store out there now is having a conversation about how much they can afford to spend to keep Amazon out of the space,” said Brian Culpepper, a portfolio manager at James Advantage funds.   Continued...

 
FILE PHOTO: A Whole Foods Market is pictured in the Manhattan borough of New York City, New York, U.S. June 16, 2017. REUTERS/Carlo Allegri/File Photo