Wild Whole?

“http://www.denverpost.com/ci_5276657

Rival to buy Wild Oats
Whole Foods, Boulder chain joining forces
By Kristi Arellano
Denver Post Staff Writer

After years of living in the shadow of its larger rival, Boulder-based Wild Oats Markets Inc. has agreed to be acquired by Whole Foods Market Inc. in a deal valued at $700 million.

The Austin, Texas-based natural-foods retailer said Wednesday that it will pay $18.50 a share, or $565 million, for Wild Oats and will assume its outstanding debt. The company said it will borrow to fund the cash deal.

Shares of Wild Oats jumped more than 17 percent to $18.43 in after-hours trading. Wild Oats shares have ranged from $13.88 to $20.60 in the past year.

"It gives our stores and our business a chance to step up to a much greater level," said Wild Oats interim chief executive Greg Mays. "Currently (Whole Foods is) the premier operator in the natural-foods marketplace, and we have the good fortune of being associated with them now."

In a conference call with analysts after the announcement, Whole Foods CEO John Mackey said the deal allows Whole Foods to expand its presence throughout the country, particularly in the Rocky Mountain, Pacific Northwest and Florida markets, where it had a smaller number of stores.

Mackey hinted at the possibility of layoffs, noting that "there's significant duplication in corporate overhead that can be eliminated." He said the company will probably close some underperforming or overlapping stores.

Whole Foods Market said it will evaluate whether to keep the Wild Oats name on its stores but will likely incorporate some Wild Oats private-label products into its business.

Retail experts said the combined companies will create a powerhouse that will dominate the natural-foods market.

"It makes Whole Foods almost unstoppable in that natural-food category," said George Whalin, president of Retail Management Consultants in San Marcos, Calif.

Denver acupuncturist Michael Harman, 47, was surprised at the news. Harman said he shops at both stores but prefers Wild Oats.

"I don't like Whole Foods as much," said Harman, who was shopping at the Wild Oats store on Colorado Boulevard. "They seem more uppity."

The two companies were the largest players in the natural-grocery sector, although both faced competition from mainstream grocers such as Safeway and Wal-Mart, which have increased their organic offerings. Whole Foods on Wednesday reported its first profit decline in five quarters.

Whole Foods operates 191 stores, including seven in Colorado. Wild Oats has 110 locations, 13 in Colorado. It employs about 7,000 people, including 300 at its newly built corporate headquarters, which anchors the Twenty Ninth Street retail development in Boulder.

Wild Oats' Rocky Mountain president, Will Paradise, said he is uncertain what will happen to that location. Wild Oats also is opening a new prototype store - widely touted as its answer to Whole Foods' more theatrical format - at Twenty Ninth Street next month. It held a job fair to fill up to 250 positions at the store last week.

Lain Adams, senior property manager for Twenty Ninth Street, said he learned of the deal from a news release and hadn't heard from Wild Oats about the future of the site.

The deal is subject to approval by Wild Oats shareholders but not those of Whole Foods. The companies expect the deal close by April. Whole Foods has completed 18 similar deals, but this is its largest acquisition.

In previous buyouts, Whole Foods has waited about three years before replacing the names of the stores it bought, said Burt Flickinger III, managing director of Strategic Resource Group, a New York business strategy consulting firm.

Because Wild Oats has been "undermanaged" and the brand doesn't resonate as strongly with customers, he predicts that Whole Foods will move to change the name more quickly.

Wild Oats stores operate under the Wild Oats, Henry's Farmers Market, Sun Harvest and Capers Community Market flags.

Flickinger said Wild Oats stores have suffered as company leaders focused more on cutting costs than on improving the store experience. He predicts that Whole Foods will upgrade the stores and has the muscle to increase sales by 50 to 70 percent at some stores within two years.

Mackey expressed similar confidence. "We plan to put jet propulsion on those stores," he said.

Wild Oats has long been viewed by analysts and customers as an also-ran, with smaller stores and less pizazz than Whole Foods. While the company had recently improved its operational performance, it has been dogged by rumors that it was a likely takeover target.

Those rumors gained momentum after Los Angeles investor Ron Burkle began increasing his stake in the company. Burkle is known as an industry dealmaker with a history of guiding big grocery buyouts. His interest in the company helped fuel a run-up in its stock price. Burkle's company, which holds 17.3 percent of Wild Oats, has committed to supporting the deal.

Wild Oats chief executive Perry Odak left the company last fall, followed shortly by chief financial officer Robert Dimond. It was during this period of corporate turnover that Mackey approached interim CEO Mays.

"I thought, 'Gosh, maybe this would be a good time to approach Wild Oats. They don't have a CEO in place, and they may not have a clear direction of where they want to go,"' Mackey said.

He said the two executives negotiated extensively over price before arriving at the final deal.”

“Whole Wild Oat Foods”

“I haven't been in a Whole Foods since we don't have one but I do like Wild Oats. I just hope they don't change it for the worse.

Anyone have both stores around them. How do they compare to each other”

“My wife says they're a smaller, less pretentious Whole Foods. She loves them but assumes they will be obliterated. It was also the last major competitor of Whole Foods and was inevitable. Good or bad is debatable.”

“We shop at Henry's and generally like it. It will be interesting to see what happens.
last edited: 2/22/07 7:57:59 PM”

“We've been in Wild Oats in Salt Lake City and Omaha. I like um. We have a Whole Food in our little town Sebastapol. Very similiar. Whole foods has a great green energy policy. Should come together nicely.”

“We like to call it "Whole Paycheck", can't get outta there without blowing your whole check.”

“How about "Whole Wild Earth?"”

“We like to call it "Whole Paycheck", can't get outta there without blowing your whole check.”
Roam Around
4:05:14 PM
2/23/07

yeah you have to watch your money in there. I usually head straight to the bulk section, look at the sale items and leave”