Firm Advises, Helps Fund Amazon’s Stunning US$13.7 Billion Acquisition of Whole Foods

Theme: Clients

In 2017, Goldman Sachs advises Amazon.com on the US$13.7 billion acquisition of Whole Foods as the grocery chain becomes part of the world’s largest online retailer. The firm also provides bridge funding for the acquisition.

On June 16, 2017, Amazon.com, Inc. stunned the financial world with its proposed US$13.7 billion acquisition of Whole Foods Market, Inc. Goldman Sachs advised Amazon on the transaction, and while the deal came together quickly, the groundwork to secure the assignment was long in the making.

More than a year earlier, Goldman Sachs had expanded its presence in major North American cities, deploying more senior coverage bankers in cities like Atlanta, Dallas, Seattle and Toronto as each became a hub of greater corporate activity. In Seattle, the firm worked to deepen its connection with not only Amazon.com, but also Microsoft and Starbucks. The strategy paid dividends when Amazon selected the firm to advise on its acquisition of Whole Foods in what would be Amazon’s first such deal valued at more than US$1 billion.

Whole Foods had been under pressure from shareholders and activist investors to improve performance since late 2016. While several potential suitors emerged, Whole Foods continued to explore its options. When the retailer learned through media reports that Amazon had expressed interest, a representative reached out to Amazon in late April. Within a month, Amazon made its initial offer.

As Amazon pursued the potential Whole Foods transaction, it relied on Goldman Sachs bankers experienced in not only technology mergers but consumer retail as well. Throughout the negotiations Amazon, as advised by the firm, insisted on complete secrecy to avoid a bidding war for the food retailer.

Amazon’s initial offer to buy Whole Foods for US$41 per share represented a premium over its then-current price of US$35 and valued the company at US$13.1 billion. A counteroffer of US$45 per share from Whole Foods was rejected as Amazon seemed to cool to the prospects of acquiring the retailer. Goldman Sachs, representing Amazon, presented a firm and final US$42 per share offer. After two weeks of due diligence in secret as mandated, the deal was approved at the US$42 per share price, valuing Whole Foods at US$13.7 billion.

In addition to serving as advisor on the acquisition, the firm provided bridge financing for the deal, along with Bank of America Merrill Lynch. Goldman Sachs was also the book runner of Amazon’s US$16 billion bond offering to finance the acquisition of Whole Foods.