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Shareholder files suit to block Amazon-Whole Foods merger

As a leader in online retail, Amazon.com is one of the largest corporations in the world, and CEO Jeff Bezos has become one of the wealthiest men in the world because of Amazon’s successful business model. Amazon’s success depends, of course, on its ability to work with vendors who provide high quality products.

Readers may have heard that Amazon recently announced plans to acquire Austin-based Whole Foods Market. The deal would allow Amazon to further expand its ability to offer the types of products for which Whole Foods is known, but the proposal is facing significant opposition. 

For example, one Whole Foods shareholder has filed a federal lawsuit alleging that the proposed transaction does not accurately reflect the value of the Whole Foods business, and that there is a lack of transparency in how the deal is proceeding. In addition, the suit alleges that the proposal does not reveal the timing and nature of communications relating to the employment and benefits of Whole Foods management.

The shareholder is accusing Whole Foods of misleading stakeholders and failing to provide them with information about the business deal, and requests that the acquisition be blocked. It remains to be seen what effect the shareholder suit will have on the proposed deal, but some experts in antitrust law say the lawsuit is unlikely to prevent the deal, since allegations of fraud are separate from competitive concerns, which is the concern of the Federal Trade Commission.

While the boards of directors for both companies have already approved the business deal, shareholders still have to vote on the matter next month, as is their right. In our next post, we’ll look at the issue of shareholder approval of acquisitions.

Source: Dallasnews.com, “Shareholder’s suit aims to block Amazon-Whole Foods merger,” Marc Ramirez, July 13, 2017.

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