Will the Amazon/Whole Foods Deal Go Through?

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Will the Amazon/Whole Foods Deal Go Through?

By Katie Martin - 07/24/2017
Whole Foods/Amazon Merger Facing Push Back

In the weeks since Amazon announced its intent to purchase grocer chain Whole Foods, several potential hurdles have popped up.

The latest is a group of Democrats in Congress have urged the U.S. Department of Justice and Federal Trade Commission in a letter sent last week to conduct a more in-depth review of the plan. The letter asked the agency to consider what effect the deal, valued at $13.7 billion, could have on access to healthy food in food deserts.

“While we do not oppose the merger at this time, we are concerned about what this merger could mean for African-American communities across the country already suffering from a lack of affordable healthy food choices from grocers,” the letter said on Thursday.

The letter was signed by U.S. Representative Marcia Fudge and 11 other Democrats, including Senator Cory Booker.

Amazon’s VP of Policy Brian Huseman sent a reply to Rep. Fudge, expressing the company’s hope to expand access to fresh food. “We agree with you that access to food is an important issue for the country, and we share your goal of improving that access,” Huseman said in the letter.

The letter from Congress is in addition to Rep. David Cillicine (D-R.I.), the top Democrat on the House subcommittee on regulatory reform, commercial and antitrust law, urging Congress to hold a hearing to analyze the acquisition. In a letter he submitted to the panel’s Republican leadership, he noted, “Congress has a responsibility to fully scrutinize this merger before it goes ahead. Failing to do so is a disservice to our constituents.”

The United Food and Commercial Workers International Union also filed a complaint to the Federal Trade Commission that argued the acquisition would trigger a wave of store closures and reduce customer choice.

“Amazon’s reach will ultimately reduce the number of grocery competitors that consumers can choose from,” Marc Perrone, president of the union wrote in the complaint. “Regardless of whether Amazon has an actual Whole Foods grocery store near a competitor, their online model and size allows them to unfairly compete with every single grocery store in the nation.”

The United Food and Commercial Workers International Union has about 1.3 million members in North America; Whole Foods is not unionized.

This follows a move by a shareholder, Robert Riegel, who filed a suit to block the proposed acquisition. The suit, filed in the U.S. District Court for the Western District of Texas, claims that Whole Foods’ July 7 proxy statement was “misleading,” “failed to disclose information important to stakeholders” and “failed to disclose how the company calculated certain valuations,” according the Austin American-Statesman.

Also, activist investor, Jana Partners, which urged Whole Foods to make significant changes, which led to the potential merger with Amazon, has sold its stake in the company for a $300 million profit. Jana Partners sold 26 million shares in Whole Foods during the past month for $1.1 billion. It began selling its shares June 19; the Amazon/Whole Foods deal was announced June 16.