Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Analyst: Kroger Should Outmuscle Amazon And Bid For Whole Foods

Courtesy of Benzinga.

Analyst: Kroger Should Outmuscle Amazon And Bid For Whole Foods

Amazon.com, Inc. (NASDAQ: AMZN)’s proposed acquisition of Whole Foods Market, Inc. (NASDAQ: WFM) implies the online retailer will pay $42 per share for the organic and natural grocer.

Shares of Whole Foods are trading nearly $1 higher than the take-out price, which implies some investors are expecting a bidding war.

In theory, any retailer whose business is selling food can try and outmuscle Amazon with the grand prize being Whole Foods, Barclays’ food and staples analyst Karen Short was quoted by Fox Business as saying. This is especially true when considering that companies have “too much to lose not to bid.”

Loop Capital Markets’ Andrew Wolf agrees with Short and argued in a report that Kroger Co (NYSE: KR) should bid for Whole Foods as both a defensive and offensive play.

In terms of defense, acquiring Whole Foods is denying Amazon a direct path towards pushing into the grocery market, Wolf argued. On the other hand, acquiring Whole Foods makes Kroger “by far” the largest natural and organic retailer that can generate tremendous synergies — even if it were to pay $50 per share.

In fact, at $50 per share Kroger’s hypothetical acquisition of Whole Foods could be up to 25 cents per share accretive to its earnings. But Kroger would likely find it better to invest all of the synergies into lowering Whole Foods’ prices as it did when it bought Harris Teeter.

If Kroger sits on the sidelines with a bid, the analyst isn’t overly concerned with the new competitive landscape. An estimated 260 Kroger stores are located near a Whole Foods store which implies only a limited potential fall out if Whole Foods’ business soars under Amazon’s control, Wolf added.

Related Links:

Speculation Runs Amok: Who Will Be Amazon’s Next Acquisition Target?

Why Amazon Should Acquire GrubHub Next

Image: mcsquishee, Flickr

Latest Ratings for KR

Date Firm Action From To
Jun 2017 Morgan Stanley Downgrades Overweight Equal-Weight
Jun 2017 JP Morgan Downgrades Overweight Neutral
Jun 2017 Telsey Advisory Group Downgrades Outperform Market Perform

View More Analyst Ratings for KR


View the Latest Analyst Ratings

Posted-In: Andrew Wolf Grocery Grocery stores Loop Capital MarketsAnalyst Color Analyst Ratings Best of Benzinga


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!