Deals and IPOs

Amazon's deal for Whole Foods came together in about a month

Key Points
  • The online shopping giant began talking to Whole Foods about a month ago.
  • Goldman advised Amazon and lead banks on the $13.7 billion bridge loan.
  • Merger comes as deal activity down 14 percent from this time last year.
Amazon's deal for Whole Foods came together in about a month

Amazon's $13.7 billion deal for Whole Foods Markets came together swiftly after the upscale grocer battled activist shareholders over its future earlier this year.

The online shopping giant began talking to Whole Foods only about a month ago, sources said, and hired Goldman Sachs to help negotiate a deal. Goldman is also leading banks, including Bank of America, on a $13.7 billion short-term loan to pay for the transaction.

The merger, announced on Friday, was embraced by Wall Street at a time when deal advisers have had little to crow about. The companies' announcement didn't even identify the bankers and lawyers who advised on the deal.

Merger activity this year is down 14 percent from this time last year, according to S&P Global Market Intelligence, which cited the lower dollar value of deals in the health care and materials sectors. Last year's deals announced by this time included Bayer's proposed $65.9 billion purchase of Monsanto.

Whole Foods hired the advisory firm Evercore Partners earlier this year to defend itself from pressure by activist shareholder Jana Partners, which announced in April it had amassed an 8.3 percent stake and pushed for changes to the Whole Foods board of directors. Neuberger Berman, which holds a roughly 3 percent stake, also put pressure on the company to make changes. The grocery chain operator Albertsons reportedly explored a deal for Whole Foods earlier this year.

Last month, Whole Foods shook up its board, naming five new independent directors to replace others who had resigned, and named a new chief financial officer. Sources said the new board members convinced Whole Foods's John Mackey to do a deal, even though he has been lashing out at the activists.

If he changes his mind and Whole Foods decides to back out of the transaction -- which has sent its shares soaring 27 percent on Friday -- it has to pay Amazon a $400 million break up fee.

--With reporting by David Faber

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