The Greedy Bastards Won

In its fight with John Mackey and Whole Foods, Jana Partners scores a decisive knockout.
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John Mackey and Barry Rosenstein

John Mackey and Barry Rosenstein

Earlier this week we learned how Whole Foods CEO John Mackey really feels about Barry Rosenstein and his team at Jana Partners, who in their attempt to turn an 8 percent stake in the yuppie-Walmart into a few board seats managed to ruin Mackey's book tour and capitalism along with it. To Mackey, Jana were “greedy bastards” and “Ringwraiths” – which, for those without a twenty-sided die, refers to bad guys from Lord of the Rings. “These people, they just want to sell Whole Foods Market and make hundreds of millions of dollars, and they have to know that I’m going to resist that,” Mackey said. “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.”

Count it as a KO. On Friday, Amazon announced it would acquire Whole Foods for $13.7 billion, representing a fat 27 percent premium on the grocer's current share price. Jana Partners might not be getting their board seats, but they will be getting a $230 million return. Looks like the Ringwraiths got their Ring.

But we shouldn't feel too bad that Mackey has lost his baby to the ravenous hedge funders and their idol Jeff Bezos. Here's Mackey speaking what is decidedly their language at the announcement:

“This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” said John Mackey, Whole Foods Market co-founder and CEO.

In some ways Amazon might seem like the anti-Whole Foods. Where the latter prizes local produce and craft goods, the former prefers to crush local competitors. Whole Foods has a reputation for treating its employees well. Amazon decidedly doesnot. Mackey wrote a book called “Conscious Capitalism” about how business leaders need to carry with them an innate sense of social responsibility. Bezos is so lacking in that department that he had to poll Twitter for ideas as to how to give rid himself of his vast fortune.

But there are more similarities than meet the eye. Certainly the two executives feelsimilarly when it comes to unions. And Bezos gets several shout-outs in Mackey's Conscious Capitalism:

Jeff Bezos of Amazon.com describes his perspective on investors: “With respect to investors, there is a great Warren Buffett-ism. You can hold a rock concert and that can be successful, and you can hold a ballet and that can be successful, but don't hold a rock concert and advertise it as a ballet. If you're very clear to the outside world that you're taking a long-term approach, then people can self-select in.” As Buffett has said, you get the investors you deserve.

Who knows if Mackey would stand by that statement in light of his Jana beef, but it's clear that Jana deserves the investment they got. If the concert analogy above applies to Mackey, it seems he's been holding a rock concert and advertising it as a ballet, except the whole thing has ended up in some muddled middle-ground in between, with shareholders being handed half-baked social dividends in lieu of the monetary kind. Jana recognized the disconnect and leaped in to exploit it. Being sold to Amazon should help clear things up.

Like Etsy before him, Mackey wanted to have it both ways, to rhapsodize warm-and-fuzzily about being a different sort of “conscious” company while still operating legally as a standard-issue publicly traded corporation. As will always be the case with these types, the market will ultimately decide which it is.

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