Whole Foods investor files federal lawsuit in bid to block Amazon takeover

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A Whole Foods Market store in Union Square, New York. Photo: Aspersions, via Wikimedia Creative Commons

There are calls for action on all fronts, with an investor seeking to block the deal in a federal court and a US lawmaker urging the House of Representatives Judiciary Committee’s antitrust panel to hold a hearing.

A Whole Foods Market shareholder is hoping to block Amazon’s proposed US$13.7 billion acquisition of the supermarket chain with a federal lawsuit, The Austin American Statesman reported. 

Investor Robert Riegel reportedly claims the deal undervalues the high-end retailer and is being made without sufficient transparency.

In the lawsuit filed in the US District Court for the Western District of Texas, he alleges that Whole Foods’ July 7 proxy statement is misleading and fails to disclose information important to stakeholders, the story reported.

“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 reportedly 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.”

The suit claims the statement did not disclose how certain valuations were calculated and requests the court block the acquisition.

A Whole Foods spokesperson told the publication in an email that the company had “nothing to add” on the matter.

Meanwhile, US Representative David Cicilline, the top Democrat on the House Judiciary Antitrust Subcommittee, has called for a hearing on the acquisition.

A statement said the proposed deal “could increase costs and decrease wages for Americans as a result of decreased competition in the marketplace.”

“Competition is essential for a healthy economy. That’s true across the board. Amazon’s proposed purchase of Whole Foods could impact neighbourhood grocery stores and hardworking consumers across America,” Cicilline wrote in a letter to House Judiciary Committee Chairman Bob Goodlatte and Subcommittee Chairman Tom Marino.

“Congress has a responsibility to fully scrutinise this merger before it goes ahead. Failing to do so is a disservice to our constituents.”

Online retail giant Amazon announced it had entered into a definitive merger agreement with Whole Foods on June 16, with an offer of US$42 per share representing a 27% premium to Whole Foods’ closing price the previous day.

Shares of other supermarkets tanked after the game-changing deal, not just in North America but in Europe too.

While the deal has been approved by both companies’ board of directors, it still has to be voted on by shareholders and approved by regulators.

The parties previously said they expected to close the transaction during the second half of 2017.

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