Whole Foods Market has bought Wild Oats Markets for US $ 565 million

The increased demand for natural and organic products has heightened competition from many players, including larger supermarket chains. Whole Foods Market and Wild Oats Markets aim to compete better in existing markets and to expand to several new markets by the acquisition.

Picture: Wholefoods market

The increased demand for natural and organic products has heightened competition from many players, including larger supermarket chains. Whole Foods Market and Wild Oats Markets aim to compete better in existing markets and to expand to several new markets by the acquisition. This deal will allow Whole Foods to expand its nationwide presence and to cut its costs. Whole Foods Chairman and co-founder John Mackey stated that the growth opportunity had led to competition for many players, most of whom were not dedicated natural and organic foods supermarkets, but they were considerably larger. Wild Oats Markets would be their largest acquisition and was a geographical fit as all of their eleven operating regions would gain stores and three of their smallest regions (Pacific Northwest, Rocky Mountain and Florida) would gain critical mass. Some Wild Oats stores, also operating under the Henry’s Farmers Market name, will be closed or relocated in areas where they overlap with Whole Foods outlets. Remaining Wild Oats stores will be renamed Whole Foods eventually.

Both grocers are well known for their customer service, quality standards, their selection and the support of local producers. The companies expect to be much stronger and better positioned by the acquisition. As Wild Oats reports, the two companies will benefit by reinforcing their authentic experience and offering for their customers. Also, this deal would provide exciting opportunities for their team members and their associates, strengthen the relationships with local and global vendors and producers and deepen the commitment to serve their communities and to protect the planet. Wild Oats’ chairman Gregory Mays stated that as the natural and organic foods industry continued to receive attention from larger conventional players, the timing for the two companies to join forces could not have been better.

This deal will also bring long term value to their shareholders. Whole Foods will buy each share of Wild Oats for US $ 18.50 in cash, a 23 % premium to the stock’s one-month closing average price. Whole Foods will assume Wild Oats debt of US $ 106 million. Ron Burkle’s Yucipa Cos., Wild Oats’ largest shareholder, had already agreed to sell its 18 % stake in the retailer.

Whole Foods Market was founded in Texas in 1980. It is a Fortune 500 company and the largest natural and organic foods retailers. The company had sales of US $ 5.6 billion in the fiscal year 2006 and currently has 191 stores in the US, Canada and the UK.

Wild Oats Markets, Inc. is a chain of natural and organic foods markets in the US and Canada. The retailer with its slogan “food that remembers its roots” began its business in 1987. The first supermarket-style store opened in 1991 and was a major factor in moving natural food retailing into a different league. In 1994, Wild Oats was named one of America’s 500 Fastest Growing Private Companies. In 1999, the retailer opened 47 stores in one year alone. With $ 1.2 billion in annual sales, the company operates 110 natural foods stores in 24 US states and in BC, Canada. In the past years, Wild Oats conditions were tougher for Wild Oats. In 2006, the company closed eight underperforming stores and subsequent business restructuring cost the company a reported US $ 25 million.

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