Amazon on Tuesday announced a new initiative to sell unsecured notes to private investors in an effort to fund its $13.7 acquisition of Whole Foods. The company didn’t provide an exact figure it’s looking to raise through the effort, suggesting that the number of issued notes will vary based on the interest from investors, with the Seattle, Washington-based e-commerce giant revealing that its latest endeavor could finance “all or a portion” of its largest acquisition to date that’s still pending regulatory approval. The news of the offering was initially reported by Bloomberg before Amazon’s official announcement on the matter and some industry analysts are speculating that the firm could raise as much as $16 billion through the initiative.
As the notes being offered by Amazon haven’t been registered in accordance with the United States Securities Act of 1933, they are considered unsecured and hence cannot be sold to anyone outside of “qualified institutional buyers” in the country and foreign investors. As such, the notes could also yield higher returns than traditional bonds and despite Amazon’s recent slump in the stock market, the company is still recording positive performance which should allow it to capitalize on the current state of the global debt market, some industry watchers believe. Between Amazon’s largely positive financials for the second quarter of the year and the fact that some experts are projecting the tech giant will become the first firm in the world to surpass the $1 trillion valuation mark, even the 40-year securities that the company is said to be offering should have no shortage of interested buyers, according to people with knowledge of the initiative.
Regardless of the outcome of Amazon’s latest move, its acquisition of Whole Foods isn’t in question as the firm already secured a bridge loan from a number of banks earlier this year, sources previously said, with the newly uncovered information being in line with the company’s statement from June when it announced that the largest merger in its history will be funded with both debt and cash. Considering how Amazon’s existing cash reserves could finance the deal entirely, it seems likely that the company will announce more major acquisitions in the near future and wants to avoid overcommitting to any single consolidation for the time being.