Amazon’s Whole Foods Acquisition Faces Opposition

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The Amazon/Whole Foods marriage may not be a done deal.

Though it sent shockwaves through the retail community when it was announced last month, the acquisition must still be approved by shareholders and the government—and now both parties are threatening to throw up roadblocks.

Congressman David Cicilline of Rhode Island has called for a hearing to review the $13.7 billion deal. Cicilline, the top Democrat on the House Judiciary Antitrust Subcommittee, is concerned that the deal will cause decreased competition, and as a result, costs could rise while wages fall.

“Amazon’s proposed purchase of Whole Foods could impact neighborhood grocery stores and hardworking consumers across America,” Cicilline said in a statement. “Congress has a responsibility to fully scrutinize this merger before it goes ahead.”

Among his concerns is that Amazon’s tech dominance will mean Whole Foods stores will be automated, costing jobs. Cicilline likens the possible effects of this deal to the way in which Walmart “destroyed small businesses.”

[Read about what others speculate the Amazon/Whole Foods deal might mean: Amazon & Whole Foods: What’s Next for Retail?]

The news out of Washington is already having an effect on the e-commerce giant. Owing to concerns like these plus the fact that Amazon’s owner, Jeff Bezos, also owns The Washington Post, a mainstream newspaper that is often critical of President Trump, Douglas Kass, head of Seabreeze Partners Management, is preparing for the government to take steps against the deal.

“I am shorting Amazon today because I have learned that there are currently early discussions and due diligence being considered in the legislative chambers in Washington, D.C.,” Kass wrote in a note to investors, according to Reuters. “If I am correct, word of this could lower Amazon’s shares by 10 percent overnight.”

In addition to the Congressman’s concerns, some Whole Foods shareholders are starting to grumble—and worse.

Shareholder Robert Riegel has filed suit in which he says that Whole Foods is withholding information and doesn’t explain the valuation claims.

“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 says, according to the Austin-American Statesman. “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.”

Riegel is seeking class action status for the suit.


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