Whole Foods set to close Wild Oats purchase

Whole Foods Market Inc. said Monday it had support from enough shareholders of Wild Oats Markets Inc. to complete the purchase of its rival, putting a successful end to a takeover opposed by federal antitrust regulators.

Whole Foods said it would own 84.1 percent of the outstanding shares of Wild Oats after its tender offer of $18.50 per share closed Monday, and another 12.7 percent were subject to guaranteed delivery over the next three days.

The company said 25.2 million shares of Wild Oats were tendered and not withdrawn and another 3.8 million shares were subject to guaranteed delivery. After buying the shares guaranteed for delivery, Whole Foods said it would acquire all the remaining outstanding Wild Oats shares.

Austin-based Whole Foods announced its $565 million offer for Wild Oats in February, but the Federal Trade Commission and some consumer groups opposed the deal, arguing it would result in less competition and higher prices for premium groceries.

The FTC filed a lawsuit in June to block the takeover, and succeeded in delaying it for several weeks, forcing Whole Foods to extend its tender offer several times.

But last week, a three-judge panel of the U.S. Court of Appeals in Washington denied an FTC request to delay the sale while regulators appealed a lower-court ruling. The appeals court said the FTC had “raised some questions” about the deal but failed to show that it would be successful in overturning the decision of the lower court.

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The FTC believed the two chains competed in a smaller market of premium natural and organic grocers. Its investigation turned up internal Whole Foods memos in which Chief Executive John Mackey said the acquisition would eliminate a competitor and avoid “nasty price wars” with Wild Oats.

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But Whole Foods argued it also competed against big supermarket chains that sell organic food.

U.S. District Judge Paul L. Friedman sided with Whole Foods, saying that about 60 percent of natural and organic foods are sold at conventional stores.

The announcement of the successful tender offer came after markets closed Monday. Whole Foods shares gained $1.21, or 2.7 percent, to $45.75; and Wild Oats shares edged up 2 cents, to $18.48.