Whole Foods, Wild Oats to Challenge FTC Opposition to Merger

AUSTIN, Texas and BOULDER, Colo. - Natural and organic retailers Whole Foods Market, Inc. and Wild Oats Markets said yesterday they would put up a fight against a move by the Federal Trade Commission to block the former's purchase of the latter.

The FTC yesterday had advised the retailers that it would ask the U.S. District Court for the District of Columbia to enter a temporary restraining order that would prohibit Whole Foods' acquisition of the Wild Oats shares until the court resolves FTC's request for a preliminary injunction.

"We intend to vigorously challenge the FTC in court," said John Mackey, chairman and c.e.o. of Whole Foods. "The FTC has failed to recognize the robust competition in the supermarket industry, which has grown more intense as competitors increase their offerings of natural, organic, and fresh products, renovate their stores and open stores with new banners and formats resembling Whole Foods Market. Evidently the FTC does not appreciate the many benefits for consumers of the proposed merger, including our plan to invest capital in and improve many of the stores currently owned by Wild Oats."

Wild Oats chairman and c.e.o. Greg Mays said, "While we disagree with the FTC's position and believe it is without legal and factual merit, we are confident that, once presented with the facts, the court will agree that this merger is pro-competitive and the FTC's application for an injunction will be denied, thus allowing us to proceed forward with the merger."

The FTC's challenge is that the relevant product market is limited to natural and organic food stores, and excludes other supermarkets. According to Whole Foods, the FTC's position is contrary to its position in past merger reviews, where its definition of supermarkets has included conventional supermarkets as well as Whole Foods and Wild Oats.

On February 21, Whole Foods agreed to buy Wild Oats for $18.50 per share in cash.

Because of the FTC's attempt to block the acquisition and the retailers' intent to challenge the FTC, Whole Foods said it now expects to extend the offer's expiration past its June 20 deadline.

Whole Foods operates 195 stores in the United States, Canada, and the United Kingdom and had sales of $5.6 billion in fiscal year 2006.

Wild Oats operates 110 natural food stores in 24 states and British Columbia, Canada. The Company's markets include: Wild Oats Marketplace, Henry's Farmers Market, Sun Harvest, and Capers Community Markets. It had more than $1.2 billion in annual sales in 2006.
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