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RetailWhole Foods

Whole Foods Sells to Amazon to Shake Off ‘Greedy Bastard’ Activists

By
Beth Kowitt
Beth Kowitt
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By
Beth Kowitt
Beth Kowitt
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June 16, 2017, 11:10 AM ET

John Mackey has never been one to shy away from controversy. And when it came to fighting activist investor Jana Partners, he seemed ready for all out war.

In a June Texas Monthly story that came out earlier this week, the Whole Foods (WFM) CEO told the magazine in an interview, “That’s my baby. I’m going to protect my kid, and they’ve got to knock Daddy out if they want to take it over.”

Today Mackey made public his plan to both protect his baby and retain control. With the announcement that Amazon intends to acquire the high-end retailer, Mackey gets to keep his CEO job and also remove the company from the pressures of operating independently as a public company.

In recent months it had become clear that Mackey was bristling at having to deal with Jana, which announced an 8.8% stake in the company in April. Mackey told Texas Monthly, “They’re greedy bastards, and they’re putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it’s in their self-interest to do so.” He also said that the way Jana had handled it was “like kicking you below the belt.”

Those words are classic Mackey. In Fortune’s 2015 profile of the CEO we noted that he has never been afraid of pissing people off. “I am absolutely a contrarian,” he said.

That mindset had helped Mackey grow Whole Foods into perhaps the most influential grocer in the U.S., but it may not have been the right temperament in dealing with activists. The company responded to Jana by laying out a strategy to cut costs and also making major changes to its board.

Included in the shake up was the addition of Panera co-CEO Ron Shaich to the board. (Shaich sold Panera to JAB Holdings in April.) Shaich and Mackey here are one and the same—two company founders inextricably linked to their brands, who were not ready to give up control.

Shaich told Fortune at the time, “I spend about 20% of my time explaining what I do and what I’m about to do,” he said. “I think being private, for Panera, doesn’t give us anything other than it frees us up.” He also was excited to no longer have to deal with activist investors. He said that JAB gave the company “safe harbor and protection to do what we do and do the work to satisfy the guest.”

Mackey was clearly taking notes.

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By Beth Kowitt
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