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The New York Times writes this morning that the immediate aftermath to Amazon's $13.7 billion bid to acquire Whole Foods was that Whole Foods' stock price went up two percent, "implying that some investors think a rival bid could emerge."

The question is, what company might make a move ... and there are no sure answers.

The Times writes: "Whole Foods’ filing suggests it wasn’t shopped around. Amazon became serious only in late April, when the company’s team signed confidentiality agreements. That means some shareholders, notably Jana Partners, an activist owner of an 8 percent stake, could be receptive to a higher price. A grocery industry buyer like Walmart could also cut costs, helping to justify paying more than the 27 percent premium Amazon is offering.

"Then there’s the defensive value. If investors were right to sell off grocery chain stocks across the board in the United States and Europe on news of Amazon’s plunge into the sector, it could be worth keeping Jeff Bezos’ online giant away from Whole Foods."

Walmart is one possibility: "Adding an upscale brand might help Walmart attract new customers and lift its grocery business. Yet that would be a change of direction. Its recent strategy has been to improve its e-commerce offering, including with Friday’s deal to buy the men’s clothing online retailer Bonobos." But, the Times writes, it would be a financial "stretch" even for Walmart, which in addition to topping Amazon's offer would have to pay a $500 million breakup fee.

There also is the possibility that the government could step in and block the acquisition on antitrust grounds, especially because President Donald Trump is no fan of Amazon CEO Jeff Bezos.

The Financial Times is skeptical: "It is, in fact, unlikely to cause alarm in the Department of Justice or the Federal Trade Commission — only partly because Mr Trump’s minimalist approach to government has left the agencies under-staffed. It is mainly because the deal presents no glaring competition concerns. Amazon is a minnow in grocery, with a 0.2 per cent share for its existing Fresh delivery service, while Whole Foods is the 10th biggest in the US with 1.2 per cent, according to GlobalData Retail estimates."

But, FT adds, "Amazon does not feel like a minnow, not to all the bricks-and-mortar retailers who have been crushed by its fearsome price-cutting and logistics prowess, starting in books and expanding inexorably to other goods and services." And, it continues, "Lina Khan, a fellow at New America, a think-tank, argued in January in the Yale Law Journal, that current antitrust policy focuses too heavily on short-term harm to consumers’ wallets and misses the long-term dominance that internet platforms can gain with ultra-low prices."
KC's View:
Could there be a competition for Whole Foods? Sure, maybe ... but if people think that Amazon isn't exactly a good fit, I cannot imagine they would think Walmart would be better.

As for a government challenge ... who knows? But Bezos was at the White House yesterday for a meeting of tech CEOs, so maybe he had a chance to do a little lobbying. (Not that it'll necessarily matter. Bezos also owns the Washington Post, which has been reporting aggressively about the Trump administration.) In the end, though, I cannot imagine that this deal could be stopped on competitive grounds. Nor should it.