Whole Foods Market CEO John Mackey on Saturday said his meeting with Jeff Bezos and the team at Amazon.com Inc. (AMZN) before the e-commerce behemoth struck a $13.7 billion acquisition of the organic grocer was "really like falling in love."
"We did talk to other companies besides Amazon. We flew up to Seattle myself and three executives and met with [Amazon CEO] Jeff Bezos and three of their senior executives and it was really like falling in love," Mackey told Students for Liberty, a libertarian group, at a conference in Washington. "You know when you fall in love you have what I call 'the conversation.' You stay up all night and talk; and it's like oh my god, it's amazing, she's the one. That's how we experienced Amazon the first time we met them. We were finishing each others' sentences before the first meeting was over."
Mackey's comments come after Action Alerts Plus holding Amazon.com acquired Whole Foods Market in July last year, a deal that happened after pressure emerged from activist investor Jana Partners' Barry Rosenstein, an insurgent manager who pushed for a sale of the grocer.
Mackey, who remains Whole Foods CEO, acknowledged that the deal emerged following activist investor pressure and that the fund that targeted him, Jana Partners, researched the business for a between a year and year-and-half "to get their ducks in a row" before launching a campaign.
"We did have shareholder activists and they were trying to take over the company. They had a campaign against me," Mackey said. "I can go on about activists and talk about things i think are flawed in a current system that allows a minority of shareholders to potentially take over a company."
However, he acknowledged that Whole Foods was at risk with its shareholder base because of "competitive incursions" from rival grocers at the same time that its same-store sales had begun to slow down and decline.
He also complained that the activists put pressure on the company's directors. During the campaign, critics argued that six of the company's board members were over-tenured and over the average tenure of S&P 500 boards of 8.3 years, according to leadership consulting firm Spencer Stuart.
"As soon as that happened the activists came in and things I had always considered a virtue like directors who never wanted to leave because they loved the company so much became a liability," Mackey said. "I would tell you - Jana Partners is not one of the good guys."
The sale to Amazon emerged roughly two months after Jana Partners launched a campaign at Whole Foods that included a number of demands, including having the company review strategic alternatives and consider selling itself. The fund had said it was prepared to nominate dissident directors if Whole Foods didn't consider strategic options, which was a real threat considering the fund has launched dissident director proxy fights to drive M&A actions several times over the past few years.
Soon afterward, Whole Foods took the unusual step of reshuffling its board to include five new directors in an attempt to appease the company's institutional investor base.
Once the deal with Amazon was struck, Mackey said he was worried that the U.S. Justice Department would block the Amazon-Whole Foods deal because of President Trump's "hatred" of the Washington Post, which is also owned by Bezos.
"It did get through regulatory agencies fairly quickly," Mackey said.
Mackey said he was happy after Amazon acquired the grocer, adding that he got to be creative again "instead of dealing with shareholders and Wall Street which is a drag."
He didn't provide much in the way of details about what kind of industry-transformative action to expect at Whole Foods now that Amazon is the owner, except to note that the company is going to become even more customer-focused going forward.
"Amazon is obsessed with working for customers. Whole Foods is too, but they are more extreme at it. We're becoming even more customer focused going forward," he said.