Jana Partners is getting paid handsomely for its effort to push Whole Foods into making some changes, a drive that led to the company’s sale to Amazon.
The activist hedge fund, which bought a more than 8% stake in Whole Foods in early April, liquidated its stake in organic grocer following Amazon’s $US13.7 billion offer and will walk away with a $US300 million profit, according to documents filed with the Securities and Exchange Commission Wednesday.
Jana, run by billionaire Barry Rosenstein, wasted no time putting the heat on Whole Foods CEO John Mackey and agitating for a management overhaul. Mackey and his team responded by hiring a top defence banker from Evercore, setting in motion the events that would lead only weeks later to a buyout offer from Amazon.
Jana started unloading shares not long after Amazon and Whole Foods announced their $US42-a-share deal on June 16. Whole Foods shares began to creep above the deal price after the announcement as investors wagered that a rival bid would emerge, but Jana’s decision to exit is a clear indication the $US5 billion fund didn’t expect one.
After the weekend, on June 19, Jana began hedging its bets, selling 1 million shares at over $US43 a per share, according to a filing with the SEC. The fund continued selling shares above the deal price throughout June, unloading 2.8 million in total for $US120.8 million.
By July, it became clear that no rival bidder would emerge. An SEC filing on July 7 revealed that there had been seven companies vying for Whole Foods, including to grocery rivals, but that Amazon had insisted on avoiding a bidding war and demanded secrecy from Whole Foods while the deal was negotiated.
Shares slipped back down toward the deal price, and Jana began liquidating the rest of its more than 26 million shares.
Jana, which bought its stake for $US794.5 million in April, sold its shares for $US1.09 billion, netting $US298.1 million — a 38% return.
Not bad for a couple months’ work.