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Whole Foods-Wild Oats merger opposed by FTC

June 06, 2007|Daniel Yi | Times Staff Writer

U.S. antitrust regulators said Tuesday they planned to sue to block the proposed merger of the nation's two best known natural-foods grocery chains because it would be bad for consumers.

Whole Foods Market Inc. and Wild Oats Markets Inc. "are engaged in intense head-to-head competition in markets across the country," said Jeffrey Schmidt, director of the Federal Trade Commission's Bureau of Competition.

"If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality and fewer choices," Schmidt said.

Austin, Texas-based Whole Foods said in February it had agreed to buy Wild Oats, based in Boulder, Colo., for about $565 million in cash.

The two companies pledged to fight any FTC suit, saying regulators were ignoring the increasingly abundant organic and natural products available at mainstream grocery stores.

"The FTC has failed to recognize the robust competition in the supermarket industry," Whole Foods Chief Executive John Mackey said in a statement.

Under the planned acquisition, which has been approved by both companies' boards of directors, Whole Foods would buy Wild Oats' outstanding shares at $18.50 a share.

Whole Foods, which had sales of $5.6 billion last year, has 191 stores in the U.S., Canada and Britain, including 20 in Southern California.

Wild Oats, with $1.2 billion in sales last year, operates 110 stores in the U.S. and Canada under a variety of names. In Southern California, the company has five Wild Oats locations and 26 Henry's Farmers Markets.

Wild Oats' shares dropped to as low as $16 immediately after the FTC news but recovered to $17.16 to close for a gain of 1.48% or 25 cents.

Whole Foods lost $1.21 for the day, or 2.90%, to close at $40.48.

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