Whole Foods Gets a Go-Ahead to Purchase Wild Oats

An appeals court rejected the Federal Trade Commission’s attempt to block the $565 million takeover transaction thus giving a go-ahead to Whole Foods Market Inc. to purchase its rival Wild Oats Markets Inc.

The Austin, Texas based Whole Foods Market is a natural foods grocer and operates in close to two hundred locations in the United States, Canada, and the United Kingdom. On the other hand, Wild Oats, founded in 1987 in Boulder, Colorado operates 110 stores in 24 states and British Columbia, Canada. It is also the nation's second largest natural and organic foods chain.

To recall, in February this year, Whole Foods Market, Inc. and Wild Oats Markets Inc. announced their merger plans. Under the agreement, Whole Foods Market, Inc. was to acquire Wild Oats Markets Inc.’s shares in a cash tender offer of $18.50 per share.

However in June, the Federal Trade Commission challenged the deal stating that it would violate federal antitrust laws by eliminating the substantial competition between the two uniquely close competitors in the operation of premium natural and organic supermarkets.

The FTC was unsuccessful in its endeavor to block the merger last week, after the court ruled that it wouldn't limit competition and would not drive up prices as the agency claimed. Now, the denial of the emergency stay allows the companies to complete the transaction.

In the ruling, the court said that several companies, including Safeway Inc., Kroger Co. and Supervalu Inc., are present in the market which have been moving on Whole Foods' turf and that they offer various types of premium organic and natural foods.

The U.S. Court of Appeals for the District of Columbia said, “Although the FTC raised some questions about the district court's decision, it has failed to make a strong showing that is it likely to prevail on the merits of its appeal. At this stage, the FTC has failed to meet that burden.''

Whole Foods shares rose 70 cents, or 1.6 percent, to $44.04 whereas Wild Oats shares increased 41 cents, or 2.3 percent to $18.48.