Whole Foods shares traded above the $42 price offered by Amazon amid speculation there could be a bidding war for the upscale grocer.
Analysts said other retailers may do anything to keep the retailer out of Jeff Bezos' hands.
Barclays analysts, in a note, said they would not be surprised if a strategic retail buyer tried to steal Whole Foods from Amazon, or at least force the online giant to pay up for the acquisition.
Whole Foods stock closed at $42.68 per share Friday. Barclays analysts said they raised their price target to $48, but they saw an upside price for Whole Foods of as much as $57 per share.
Barclays said bidders could include such retailers as Wal-Mart, Target or Kroger. An industry source, however, said Target is not interested in Whole Foods. Wal-Mart and Kroger were not immediately available for comment. Whole Foods would be required to pay Amazon a $400 million breakup fee if the deal is canceled for another bidder.
"We assigned a 40 percent probability to this scenario," the Barclays analysts said of another bid. "Our downside scenario is $42, which is equal to Amazon's current bid. ... We believe there is little regulatory risk that would prevent an Amazon/Whole Foods deal from being consummated. We assign a 60 percent probability to this scenario."
The Barclays analysts noted that very few entities could outbid Amazon, but "many will do anything to either make this acquisition more costly for [Amazon] or prevent the asset from landing in [Amazon's] lap – because remember – retail strategic bidders would eliminate overhead at [Whole Foods] in the event of an acquisition, Amazon intends to let Whole Foods operate as is," they wrote. The analysts said a strategic buyer could see synergies of up to $600 million.
Oppenheimer analysts also say Amazon may be undervaluing Whole Foods' brand name strategy and its strong retail locations, and that means another bidder — or Amazon —could have to pay more. Oppenheimer analyst Rupesh Parikh raised his price target to $45.
Amazon has said it would pay $42 per share in cash, or $13.7 billion, for the upscale grocery chain, known for its organic food and quirky culture.