Appeals Court: Whole Foods-Wild Oats Merger Can Go Ahead

A federal appeals court on Thursday denied the FTC's request for an emergency stay to block the purchase by natural grocer Whole Foods of its smaller rival Wild Oats. Last week, U.S. District Judge Paul L. Friedman refused to allow the FTC's request for an injunction and also refused to grant a stay of his decision. The FTC appealed, but a three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit, while granting that the FTC had "raised some questions" about the $565 million merger, rejected the Commission's claim that Friedman's decision was flawed. The FTC argued that the combination will result in constrained competition and higher prices, but Friedman noted that traditional grocers Safeway and Kroger are already selling organic foods and are redesigning stores to compete with Whole Foods. "To put it colloquially, this train has already left the station," Friedman wrote in his 93-page ruling. Whole Foods' tender offer for Wild Oats expires Monday night, and it has said it will close the deal as soon as possible. Once the merger is completed, the FTC will likely drop the case, according to King & Spalding antitrust lawyer Andrew Berg. "It's very difficult once the eggs are scrambled to unscramble them," he said.

Sources: Forbes, MarketWatch, Reuters, TheStreet.com, Bloomberg
Commentary: Judge to FTC: No Stay of Ruling on Whole Foods Merger • Judge Refuses to Block Whole Foods-Wild Oats Merger • Note To FTC: Time To Get New Lawyers
Stocks/ETFs to watch: WFMI, OATS. Competitors: KR, SVU, SWY. ETFs: XLP, VDC, PSL
Earnings call transcripts: Whole Foods Market F3Q07

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