Three Reasons Why a Whole Foods-Publix Deal Doesn't Make Sense
LAKELAND, FL and AUSTIN, TX - We’ve examined why a Whole Foods and Publix deal might make sense, but it’s still one of the more bizarre rumors to come out so suddenly. Whole Foods’ shares saw a spike in heavy volume on June 5, and interest in options was triple the normal amount in early trading, according to options analytics firm Trade Alert, fueling unsubstantiated reports of the rumored acquisition.
Spokesmen from both Whole Foods and Publix have commented on the rumor, saying that they either don’t comment on rumors or that the rumors “have no merit.”
Additionally, Gavin Maguire, a senior analyst at Briefing.com, which provides financial commentary and analysis, claimed, “We see rumors like these 20 to 30 times a day, and very few of them end up coming to fruition. All the clues are there that this would kind of make sense. But you see this kind of activity all over the market, especially in a stock that got crushed.”
With that said, the Austin Business Journal gives three more reasons why the deal seems unlikely…
1) Acquisition history: Rather than buying entire chains, Publix has only bought a handful of stores such as the $500 million purchase of 49 Albertsons stores in Florida in 2008, or last year’s acquisition of seven Bi-Lo stores in Charlotte, North Carolina, Austin Business Journal reports. If a deal were to happen, it might be more likely to see Publix buy blocks of Whole Foods stores, especially those in the southeastern region of the U.S.
2) Geographic disparities: The majority of Publix stores are based in the Southeast U.S., with 1,077 supermarkets in Florida, Georgia, Alabama, South Carolina, Tennessee, and North Carolina. Whole Foods, on the other hand, has approximately 383 stores across the U.S. and District of Columbia, Canada, and the United Kingdom. Although Publix has been expanding outside Florida in recent years, analysts say it’s a bit of a stretch for the chain to broaden its scope nationwide with a Whole Foods acquisition, according to Herald Tribune. Publix has spent a considerable amount of time building a strong network of stores in Florida. For now, it seems unlikely that it will budge. These maps from Big Think show you how the two retailers compare geographically.
3) Strategy: Since 2011, Whole Foods has maintained a goal of 1,000 stores in the U.S. and Canada and has since expanded that goal to 1,200. Whole Foods CEO John Mackey said that while competition has accelerated, Whole Foods is still gaining market share. “We continue to differentiate. We continue to innovate. We continue to upgrade the experience that we’re giving our customers. We think it’s a good strategy and that’s why we’ve gone for the first time and laid out how we see the next five years happening,” said Mackey, according to Austin Business Journal.
Check out our previous articles on the rumored Whole Foods and Publix deal below...
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