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ACQUIRING

ASWATHY P AJAYKUMAR
ATHULYA SUSAN JOHN
CHINNU MERIN STARLY
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M&A DETAILS
• Bidding Firm: Tech Mahindra
• Targeting Firm : CJS Solutions
• Deal Value : $110 million (about 734 crore)
• Date : 6th March, 2017
• Type of Merger : Vertical
• Tech Mahindra initially bought 84.7 per cent stake with an upfront
payment of $89.5 million, and the balance 15.3 per cent will be
acquired over three years. The transaction is closed by April 2017.
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TECH MAHINDRA
• Tech Mahindra Limited[3] is an Indian multinational provider of information
technology (IT), networking technology solutions and Business Process
Outsourcing (BPO) to various industry verticals and horizontals.
• Tech Mahindra was ranked 5 in India's software services (IT) firms and a part in
Fortune India 500 list.
• Founded in :1986
• Founder: Anand Mahindra
• CEO: C.P Gurnani
• Services: IT, Business Consulting, and outsourcing
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CJS SOLUTIONS
• Founded in 1980 by John Mackey in Austin, Texas
• Entered UK market in 2004 by buying 7 Fresh and Wild stores
• Emphasis on highest quality perishable food ( fresh produce)
• Leading natural and organic foods supermarket
• Positioned as Americas healthiest grocery store
• In the fiscal year 2016, the company had sales of approximately $16 billion and has
more than 460 stores in the United States, Canada, and the United Kingdom.
 Motivation behind the Acquisition!! 5
1. DATA
• The data from Whole Foods customers is literally “rich”.
• This data is from affluent shoppers who represent high margin upsell opportunities
for Amazon.
• It is stated that the typical Whole Foods customer has over $1000 per month in
disposable income.
2. PRODUCT
• Whole Foods has a strong private label business with its 365 brand.
• The reason for vertical integration is that private brand product is higher margin than
third-party branded product.
• Private brand product represents differentiation and also create a reason for the
consumer to buy through Amazon as opposed to going elsewhere.

Amazon storefronts are the
new normal for many
grocery retailers.
• Amazon gained storefronts
and it has added 11 food
storage centers to its
expanding network of 450-
plus distribution centers to
support expansion of its
services
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Amazon is anticipated to Operational
grow its share of wallet competitiveness is only
• They are now able to likely to ramp up
provide a missing category • Gaining access to Whole
of product to customers, Foods’ network of food
thus increasing an already suppliers and distributor, it
large annual spend. is expected to increase
Amazon’s influence in
vendor negotiations by
pushing competitors’ profit
margins down

Monopoly
• By inheriting 460 stores of Whole Foods, it
leads to an increase in product (scale) which
will lower the average per unit cost, creating
economies of scale
• This will give Amazon even more market
power, pushing it closer to monopoly status.
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Retailers may leverage Amazon for
advantage
• Leveraging Amazon’s market place platform
as a 3P vendor19 in addition to its nascent
physical store presence may prove quite
lucrative for retailers desiring to provide
consumers with an easily accessible
omnichannel experience day or night.
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SYNERGIES

• Last mile logistics :

-Amazon can take advantage of sophisticated logistic system in place with
Whole Foods Market.
• Encompassing Consumer Experience:
-Amazon has augmented the ability to be involved in daily consumer
purchase
• Amazon’s prime customers are offered special discounts at Whole Foods
Stores
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FINANCING
• Amazon acquired Whole Foods Market for $42 per share in an all-
cash transaction valued at approximately $13.7 billion, including
Whole Foods Market’s net debt.
• Amazon issued debt to finance the proposal
• The debt was broken into seven parts, ranging from three-year notes
to 40-year notes
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FINANCIALS
• On March 20, 2018, Amazon became the second most valuable company in the world,
with a market capitalization exceeding $768 billion.
• Amazon has gained almost $19 billion in market capitalization shortly after the
announcement, and the acquisition was finalized in August 2017.
• Revenue rose 34 percent to $43.7 billion in the third quarter, including $1.3 billion in
sales from Whole Foods. Analysts had expected $42.1 billion.
• Revenue from its online stores jumped 22 percent to $26.4 billion, the fastest growth
Amazon has seen in the segment in more than a year.
• Revenue from subscription fees such as Prime grew 59 percent to $2.4 billion
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