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Whole Foods Market and Wild Oats Merger

16 Pages Posted: 9 Jun 2009  

L. J. Bourgeois III

University of Virginia - Darden School of Business

Paul Hammaker

University of Virginia - Darden School of Business

Chris Aprill

University of Virginia - Darden School of Business

Daniel Payne

University of Virginia - Darden School of Business

Stephanie Ring

University of Virginia - Darden School of Business

Kristin Strauss

University of Virginia - Darden School of Business

Abstract

Whole Foods and Wild Oats were both natural- and organic-food stores that competed for similar customers on values such as high-quality and healthy products, excellent customer service, knowledge of products, and an enjoyable shopping experience. In February 2007, Whole Foods announced that it would purchase a smaller, yet formidable competitor, Wild Oats. There was tremendous geographic complementarity involved: The merger would give Whole Foods the largest footprint within the natural- and organic-grocery industry in North America.

Excerpt

UVA-BP-0533

Dec. 23, 2008

WHOLE FOODS MARKET AND WILD OATS MERGER

John Mackey, chairman, CEO, and cofounder of Texas-based Whole Foods Market, sat at his desk, rubbing his eyes. It was April 23, 2008, over a year since Whole Foods announced its intention to acquire Colorado-based Wild Oats Markets, its closest competitor, in February 2007, and the acquisition was still in legal turmoil. After defeating an antitrust lawsuit filed by the U.S. Federal Trade Commission (FTC), Whole Foods had moved forward with its acquisition of Wild Oats in August 2007. But in October 2007, Mackey received word that the FTC had filed an appeal with the U.S. Court of Appeals for the D.C. Circuit; however, nothing had been decided.

Despite the challenging regulatory environment, Mackey and his management team had already begun integrating Wild Oats into Whole Foods. Of the initial 109 Wild Oats stores, Whole Foods sold 35, closed 12, and converted one-third of the remaining stores into Whole Foods outlets. Mackey had no idea how Whole Foods would “undo” the deal if the court did not rule in its favor. Yet, even if Whole Foods won the court battle, the mounting legal fees and potential distraction from operations was sure to have a negative impact on the benefits expected from the $ 565 million deal. Now, as Mackey thought back to last February, he was uneasy about the decision he and his management team had made to purchase Wild Oats. He was also unsure how to react to the possible implications of the court's impending decision.

Whole Foods Company Background

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Keywords: Postmerger integration, industry consolidation, corporate strategy

Suggested Citation

Bourgeois, L. J. and Hammaker, Paul and Aprill, Chris and Payne, Daniel and Ring, Stephanie and Strauss, Kristin, Whole Foods Market and Wild Oats Merger. Darden Case No. UVA-BP-0533. Available at SSRN: https://ssrn.com/abstract=1416561

L. Jay Bourgeois III (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924 -4833 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/bourgeois.htm

Paul Hammaker

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Chris Aprill

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Daniel Payne

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Stephanie Ring

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Kristin Strauss

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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