FTC Approves Whole Foods-Amazon Merger -- Update

By Heather Haddon Features Dow Jones Newswires

Amazon.com Inc.'s takeover of Whole Foods Market Inc. cleared its biggest hurdle on Wednesday as federal regulators approved the e-commerce giant's big bet on the more than $700 billion food retail market.

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The Federal Trade Commission's decision allows the companies to complete their $13.7 billion deal, including debt, and avoid a prolonged antitrust investigation.

Whole Food shareholders also cleared the deal Wednesday, the Austin, Texas-based company said. Amazon shareholders don't need to sign off on the transaction.

Amazon and Whole Foods both want to close the deal by the end of the year. Whole Foods had seen its stock lose more than half of its value as its sales have slumped in the past two years, as mainstream supermarkets have started to sell similar natural and organic goods offerings at lower prices.

The slump prompted activist investors this year to push for board and operational changes at Whole Foods. That pressure drove Whole Food executives to agree to a deal with Amazon, which is seeking to expand its reach into food retail.

The deal is the biggest U.S. retail merger so far this year, and would be the third largest since 1995, according to Dealogic.

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Shareholder proxy services Institutional Shareholder Services Inc. and Glass, Lewis & Co. endorsed the merger despite some concerns over a lack of a full sales process. Glass Lewis said increasing competition in the grocery sector and questions surrounding Whole Foods's ability to improve its operations makes the deal beneficial to investors.

Shareholders also approved proposals to decrease the number of publicly traded Whole Foods shares by half, and to allow payouts to company executives under the deal.

ISS expressed reservations about the cash and stock payouts, which amount to $20 million to six officers if they are replaced. But the proxy service recommended shareholders vote for it given the payouts represent a fraction of the stock value gains under a merger.

Laura Stevens contributed to this article.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

August 23, 2017 18:05 ET (22:05 GMT)