NEW YORK: U.S. food retailer Whole Foods Market Inc. announced it is buying rival Wild Oats Market Inc. in a $671 million deal, including debts. The company said the acquisition will help it to compete better in the traditional grocery markets in the country.
The world's largest natural and organic grocery chain is paying about $18.50 a share of Wild Oats Market and assuming $106 million in debt. The cash part represents a premium of nearly 18 per cent over Wild Oats Market's Wednesday closing share price.
The deal will bring to the company's fold nearly 110 Maketplace, Henry's Farmers Market, Sun Harvest and Capers Community Market stores of Wild Oats Market, located in some 24 states and British Columbia and Canada. Whole Foods Market has 191 stores in the U.S., Canada and the U.K. and employs 39,000 people.
John Mackey, chairman, chief executive officer and co-founder of Whole Foods Market, said the two companies had similar missions and core values and hoped that the synergies gained from the merger will create long-term value for its customers, vendors and shareholders, as well as exciting opportunities for the respective team members.
This will be Whole Foods Market's largest of the 18 acquisitions it had made so far.
Wild Oats Market chairman and chief executive officer Gregory Mays said the merger is in the best interest of the company's stakeholders and that the company's board has unanimously recommended that its shareholders tender their shares in the offer.
Whole Foods Market said it expects to close the transaction in April. It said post-acquisition, it will refurbish some of the Wild Oats Market's stores, while some stores will be closed down.
Wild Oats Market had posted a loss in two of the past five years, while its sales had risen 26 per cent to $1.12 billion.
Whole Foods Market, on the other hand, has doubled its profit and sales. It said it has earned $53.8 million, or 38 cents per share, in its fiscal first quarter, compared to a profit of $58.3 million, or 42 cents per share, a year earlier.
Shares of both the companies rose as investors welcomed the deal. Whole Foods Market's shares went up 13 per cent at $51.62, while Wild Oats Market gained 17.2 per cent to reach $18.43.
