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JPMORGAN: There's a chance Walmart will go head-to-head with Amazon to buy Whole Foods (AMZN, WMT, WFM)

Walmart could realistically start a bidding war with Amazon over Whole Foods, according to JPMorgan.

UTAH: Walmart

Amazon's deal to acquire Whole Foods may seem like a dream come true to some, but there's a realistic chance Walmart could still swoop in to trump Amazon's $13.7 billion offer, according to JPMorgan.

Whole Foods stock has been trading above Amazon's offer of $42 a share, signaling that investors believe a bidding war could emerge and drive up the final price for Whole Foods.

Competitors like Target, Costco, and Kroger have been rumored as potential suitors, and they'd do anything to make this deal harder for Amazon, according to

According to JPMorgan, Walmart is the only retailer with a legitimate shot of entering the fray.

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Here's JPMorgan (emphasis added):

Ahold-Delhaize (AD NA).

  • Grocery is its strongest advantage right now against Amazon, its top competitor. That moat is significantly diminished once Whole Foods is safely in Amazon's clutches.
  • Whole Foods would also fit nicely into Walmart's network of stores without overlapping too much, as their stores are concentrated in urban, high-income locations.

That's not to say that a Walmart bid would be a slam dunk. While JPMorgan thinks Walmart is the only competitor in the group "with the means and motive to counterbid," doing so would have serious downsides.

For starters, it puts Walmart in a defensive position rather than offensive: It already owns a colossal network of brick and mortar grocery stores; what it really needs to improve is its online platform.

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"Given Walmart’s 20%+ share in grocery, why should the company spend $14B+ on what it’s already good at (selling food via brick-and-mortar) when the money instead could be used to expand and improve Jet.com and Walmart.com? Jet.com is Walmart’s urban/millennial alternative to Amazon Prime, and Walmart.com is in many ways the 'forgotten man’s' alternative to Prime."

Walmart is probably the only company out there with the financial firepower and the motive to compete with Amazon for Whole Foods. But it wouldn't be easy, and Amazon, with a cash war chest nearly $20 billion larger than Walmart's, will have the right to match or beat any offer that comes in.

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