Is A Whole Foods Takeover On The Cards?

Following rumours of a Kroger acquisition, organic grocery chain Whole Foods Market witnessed a brief spike in its stock.

Jumping 5 percent to $29.33, the fleeting rise marked the troubled grocer’s highest gain in four months, however, analysts have been quick to dismiss reports of a takeover as ‘industry chatter’.

Whole Foods Market is riding out a period of decline, struggling with poor sales in recent years, and the company’s stock dropping by more than 45% over the last 12 months.

Widely criticised for its overpriced products and hit with a warning from the FDA, following a series of violations in its food preparation facility, speculation of a possible buyout has been rife.

Hoping to reverse its fortunes, the launch of 365, a chain of new stores targeting the budget market have yet to have an impact on the company’s slowing sales, however Jeff Turnas, president of the Whole Foods offshoot is hopeful.

“Food shopping is evolving around convenience and price,” he told Business Insider earlier this year. “There are a lot more options for people these days — whether it’s groceries or restaurants or convenience stores — and 365 is our way of evolving,” he added.

But, with competition in the market increasing at an alarming rate, the organic retailer’s problems aren’t likely to disappear, making it a prime prospect for acquisition.

According to CNN Money, Kroger has been an aggressive acquirer of regional chains in the past few years, most recently acquiring Roundy’s, which operates hundreds of stores in the US.

But, while Kroger has a history of successful acquisitions under its belt, with its own organic business estimated to be worth $11 billion in sales last year alone, it raises the question of why it would want to take on a troubled business like Whole Foods Market?

In fact, with the news of Amazon’s plans to open brick-and-mortar convenience stores for its Amazon Fresh customers in the US, Kroger’s time and money might be better spent combating this threat.

Kroger and Whole Foods have yet to respond to speculation, however following a report by Dealreporter last week, in which the news platform indicated that Kroger is not looking to acquire Whole Foods, the organic grocer’s shares declined once again.