Dive Brief:
- Jana Partners, the activist investor that purchased an 8.2% stake in Whole Foods and urged the struggling natural and organic retailer to explore a sale, has sold its shares in the company, according to Reuters.
- The firm paid $712 million for 27.9 million shares in March and sold its stake for more than $1 billion earlier this week, a regulatory filing shows.
- Just over two months after Jana purchased its stake in Whole Foods, Amazon agreed to buy the grocer for $13.7 billion.
Dive Insight:
Amid all the excitement and speculation surrounding Amazon’s impending acquisition of Whole Foods, it’s easy to forget that just a few months ago the grocer was in a fight for its life.
Jana Partners, which had previously put pressure on Conagra, Safeway and numerous other firms, bought a nearly 9% stake in Whole Foods and issued an ultimatum that summed up the frustrations many investors and industry observers had at the time: Improve your operations, or put the business up for sale.
Whole Foods CEO John Mackey didn’t appreciate the intrusion, calling members of the firm “greedy bastards” in an interview with Texas Monthly. But Jana’s influence, it seems, was pivotal in setting up Amazon’s $13.7 billion offer for Whole Foods.
According to a proxy filing with the Securities and Exchanges Commission just days after Jana bought its stake, the grocer pursued a meeting with Amazon about a potential sale. Amazon wasn’t the only company interested: Four private equity firms and another retailer, “Company X” — identified by Reuters as Albertsons — also were interested in acquiring Whole Foods. Amazon ultimately prevailed when it told the grocer it would not engage in a sale process that involved other suitors, and made a firm $42 per share offer.
Whole Foods’ stock went as high as $44 per share after the offer in anticipation of a bidding war — something Jana and other investors no doubt wanted to see. The likelihood of that happening has cooled, and Jana’s cash-out seems to indicate that another bidder won’t surface.
Still, for Jana this amounts to mission accomplished, which in addition to netting a tidy profit improves its clout as an industry disrupter. This may also further embolden activist investors throughout the food industry seeking to elbow their way into corporate board rooms. One notable battle going on right now is between Nestlé and hedge fund manager Daniel Loeb who wants to see the company increase its margins and shrink its bureaucracy.
As CPG firms such as Nestlé and grocers like Whole Foods struggle with increasing competition, industry consolidation and shifting consumer preferences, it’s not hard to imagine activist investors becoming more active in the years to come.
