The Amazon.com Inc. (NASDAQ: AMZN) buyout of Whole Foods Market Inc. (NASDAQ: WFM) was partially to flank Wal-Mart Stores Inc. (NYSE: WMT), which counts on groceries for a large portion of its U.S. revenue. Speculation has arisen that Walmart will try to turn the tables and make a higher bid for the upscale food retailer.
A JPMorgan research report that said:
We do think there is a chance that Walmart makes a bid. WMT stands out as the only company in our coverage with the means and motive to counterbid, but the motive is ultimately more driven by a defensive strategy.
Walmart has over 4,000 locations in the United States, and Whole Foods only 420. A bid for Whole Foods would be a defensive move by America’s largest retailer more than anything else.
Walmart could face an antitrust charge if it were to make an offer, although the charge would be a stretch. Several large grocery retailers, led by Kroger Co. (NYSE: KR), have a large part of the market.
Walmart would need to top Amazon’s $13 billion offer, which is about $43 a share. The speculation from JPMorgan has not been taken seriously by the market so far. Whole Foods stock was basically flat over the past few days, and last seen at $43.01 on Friday. It has a 52-week trading range of $27.67 to $43.64 and a consensus price target of $38.00.