I am working on a research project on acquisitions/mergers. I have been reading the details of Amazons acquisition of Whole Foods. In the articles that I'm reading, I see that Whole Foods shareholders voted to approve the deal, but Amazon's shareholders did not have to vote. Can anyone help me understand this aspect of an acquisition? Is it the case that only the side of the company being acquired has to be voted upon by shareholders? Thanks

1 Answer 1


I'm not familiar with this particular transaction, so I'm just addressing the question generically: why did the seller need shareholder approval while the buyer didn't?

In an article called "Is Shareholders Approval Needed to Sell a Business?", Linkilaw quotes Spencer Summerfield, Head of Corporate at Travers Smith:

“The rights of shareholders can be limited, modified or waived. However, shareholders cannot be financially liable for more than the amount unpaid on their shares. Shareholders can agree with the company and/or between themselves that their rights are restricted.”

For the company being acquired, there are various ways that their shareholders' rights could be restricted. The article comments on shareholder agreements and bring-along / drag-along rights (conditions allowing the compulsory acquisition of shares from shareholders that don't want to sell).

If the deal involved a change in the board of directors, as would be expected in an acquisition, the shareholders of the acquired company should be involved in the decision.

For the acquiring company, if this was in their normal course of business and didn't affect the rights of their own shareholders regarding their own company, the decision could be considered a management-level or perhaps a board-level decision, within the scope of their respective mandates. This argument is strengthened if the amount paid doesn't represent too significant a portion of the acquiring company's value, and if the acquisition doesn't change the course of the acquiring company's business.

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