Neuberger Berman Expects Bidding War for Whole Foods After Amazon Deal

By David Benoit Features Dow Jones Newswires

Mutual-fund giant Neuberger Berman thinks Amazon.com Inc. may have just kicked off a bidding war for Whole Foods Market Inc.

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The retail giant announced plans to buy Whole Foods for $13.7 billion including debt, or $42 a share, Friday, jolting the grocery industry. Shares of Amazon rallied while other grocers plunged in the face of the new competition.

The market reaction and the deal's price tag has Neuberger speculating a topping bid may arrive for Whole Foods. The investor owns about 2.7% of Whole Foods.

"It's not a big check," Neuberger portfolio manager Charles Kantor said in an interview. "I would be very surprised if this is the final chapter of Whole Foods."

The deal values Whole Foods at roughly 10.5 times its expected 2018 earnings before interest, taxes, depreciation and amortization. The deal comes at 27% over Whole Foods' Thursday closing price, but it is only 18% above its Wednesday close, before the stock sank on rival grocer Kroger Co.'s gloomy earnings report.

Whole Foods declined to comment.

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Write to David Benoit at david.benoit@wsj.com

(END) Dow Jones Newswires

June 16, 2017 13:15 ET (17:15 GMT)