Shares of Whole Foods shed 2.9% to close at $40.48 Tuesday after the Federal Trade Commission said it will block the company's pending $565 million takeover of competitor Wild Oats Markets. The two companies plan to challenge the FTC's suit, which follows a request in March for additional information on the $18.50-per-share deal. The FTC claims the transaction will result in an unacceptable limitation on competition in the natural and organic food market. "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," said Whole Foods Chairman and CEO John Mackey. Shares of Wild Oats fell 5% to $16.00 before rebounding to close up 1.4% at $17.16.
Sources: FTC release, Whole Foods release, Bloomberg, Reuters, MarketWatch, TheStreet.com
Commentary: Knowledge Problem: Whole Foods - Wild Oats Merger : An Antitrust Concern? • Brand Autopsy: Whole Foods / Wild Oats Merger Implications• Whole Foods to Consume Wild Oats
Stocks/ETFs to watch: Whole Foods Market, Inc. (WFMI), Wild Oats Markets, Inc. (OATS). Competitors: WalMart Stores Inc. (WMT), The Kroger Co. (KR). ETFs: Consumer Staples Select Sector SPDR (XLP), Vanguard Consumer Staples ETF (VDC), PowerShares Dynamic Consumer Staples (PSL)
Conference call transcripts: Whole Foods Market F2Q07
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