Amazon’s deal to acquire Whole Foods Market may seem like a dream come true to some, but there’s a realistic chance Walmart could still swoop in to trump Amazon’s $13.7 billion offer and snatch the grocery store chain away from the eCommerce retail giant, according to J.P. Morgan.
On Wall Street, the news this week was that Whole Foods stock has been trading above Amazon’s offer of $42 a share, signaling that investors believe a bidding war could emerge and drive up the final price for the Whole Foods acquisition.
Competitors like Target, Costco and Kroger have been rumored as potential suitors for the grocery chain, and they’d do anything to make this deal harder for Amazon, according to Barclays analyst Karen Short.
According to J.P. Morgan, Walmart is the only retailer with a legitimate shot of entering the fray.
Here’s what J.P. Morgan said to CNBC:
“From our perspective, we have a hard time seeing Kroger, Costco or Target coming in over the top. We do think there is a chance that Walmart makes a bid. There are compelling reasons for it to do so (adding new, generally wealthier customers; acquiring a strong brand; generating synergies and efficiencies; et al), in addition to keeping Amazon out of its wheelhouse.”
Walmart is the only retail company with the financial might to play ball with Amazon. The current offer for Whole Foods Market comprises only 3 percent of Amazon’s market cap and only 6 percent of Walmart’s. It would match 64 percent of Kroger’s.
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