Whole Foods top brass were swept off their feet at a meeting with Amazon a month and a half ago, according to John Mackey, the Austin grocer’s CEO, who said he had an otherworldly premonition of the deal more than a year ago.
The $13.7 billion deal that is expected to bring Whole Foods Market into Amazon.com’s fold was the result of a ”whirlwind,” torrid courtship that swept the Austin grocer’s top brass off their feet. But it also included some otherworldly premonition.
John Mackey, CEO of Whole Foods Market, said the romancing began about a month and a half ago, when he and three other executives flew to Seattle to meet with Amazon. “It was actually mutual friends set us up on a blind date,” Mackey told Whole Foods staffers in a town hall meeting last Friday, the day the deal was announced.
“It was truly love at first sight,” he said. “We talked for two and a half hours. I think we could’ve talked for 10 hours. And — when we huddled together, it was like we just had — we just had these big grins on our faces, like ‘these guys are amazing.’”
Then Mackey delved into the realm of magical realism. “About a year and a half ago, I dreamed that we merged with Amazon. I woke up, and I told my wife about it. And she said, ‘That’s crazy.’ And I said, ‘I know. That’s really weird, isn’t it?’ ”
“So dreams are powerful things,” the executive said.
Mackey’s comments were included in a transcript filed with securities regulators Monday, as the world still grappled with the impact of a surprise merger deal that threatens to upend the grocery sector, one of the few major bulwarks of brick-and-mortar retail against the e-commerce tide.
Record high on Wall Street
Amazon is still basking in the glow of the announcement. On Monday its shares hit a fresh intraday high, opening at $1,017 — a record according to Google Finance — although they closed at $995.17, up $7.46, or 0.76 percent.
Meanwhile, Wall Street pundits brought out their crystal balls. Analysts with Baird said the deal will speed up the migration of grocery shopping toward an online service, and likely moderate Whole Foods’ famously high prices.
Analysts with RBC Capital Markets wrote that Amazon gains logistic advantages from Whole Foods’ 460 stores, and could help improve the grocery chain’s procurement of food and other goods.
As far as the impact on the stock of food retailers, the initial Wall Street reaction last week was “too dramatic,” RBC analysts wrote, given the differences between Whole Foods’ urban, affluent target demographic, which is similar to Amazon’s, and that of other large grocers. In any case it “shows the value of physical locations to compete in grocery,” the analysts wrote. The stock of Kroger and Wal-Mart, which tumbled Friday, edged up Monday.
One interesting twist: Whole Foods shares are trading at $43.22, up 54 cents and above the $42 cash offer made by Amazon, a sign that investors bet the terms of the engagement may change due to a bid by another deep-pocketed suitor.
At the Whole Foods meeting Friday described in the transcript, Mackey and Amazon executive Jeff Wilke, CEO of that company’s global consumer business, sought to reassure employees that a union with the powerful Seattle company didn’t mean a surrender of Whole Foods’ 40-year old culture.
Whole Foods stores and its brands, as well as its quality standards, are going to “be intact,” Mackey said, although he acknowledged that there might be “other formats” evolving from the union under other names.
“We admire the quality standards of Whole Foods,” said Wilke, who oversees Amazon’s retail businesses. “I think it would be crazy to change them.”
Most Read Business Stories
- Stunning messages from 2016 deepen Boeing's 737 MAX crisis
- Gig Harbor, other cities feel steamrolled by FCC rules on accepting 5G cellular technology
- Trump drops plan to host G-7 at Doral
- Economists identify an unseen force holding back affordable housing
- A home solution to ransomware attacks? Not necessarily. | Q&A with Patrick Marshall
Nevertheless, change is coming. “Amazon does many things better than Whole Foods Market,” Mackey said. “ So let’s be very clear about that. We do some things better than them. But they do a lotta things better than us.”
For example: an obsessive focus on customers. “By God, we’re (going to) become as customer-centric as Amazon,” Mackey said. “Because I think, sometimes, our company’s gone a little bit too much (employee-focused) at the expense of our customers.”
The deal, which is expected to close later this year, was described by Mackey as having the potential for “a healthy marriage.”
“They do admire our culture. They do. And — they’re (going to) respect it. And yet, we’re both (going to) evolve together.”