U.S. District Judge Paul Friedman has rejected the Federal Trade Commission's (FTC) request to temporarily block a deal by Whole Foods Market to acquire its smaller rival Wild Oats Markets.
With the ruling, the two companies can proceed with the $565 million deal. The FTC has the option of appealing Judge Friedman's ruling or seeking to bring its case against the merger to full trial. Short of further legal action to delay the acquisition, Whole Foods and Wild Oats will be free to conclude the deal after noon EST on August 20. Both companies have the right to terminate the deal if it is not concluded by August 31.
Andrew Klevorn, a partner at Eimer Stahl Klevorn & Solberg, told Bloomberg News that the ruling reflects the reality that "consumers look at Whole Foods as just one of many choices in the grocery segment.'
The CEOs of Whole Foods and Wild Oats expressed their approval of the judge's ruling in a joint release.
John Mackey, chairman, CEO, and co-founder of Whole Foods Market, said, "The District Court's ruling affirms our belief that a merger between Whole Foods and Wild Oats is a winning scenario for all stakeholders."
Gregory Mays, chairman and CEO of Wild Oats, said the deal "will mean significant career opportunities for our store associates, capital investment in our stores to enhance the shopping experience for our customers, and value-creation for our shareholders."
Whole Foods plans to sell 35 Henry's and Sun Harvest store locations and a distribution facility in Riverside, Calif. to a subsidiary of Smart & Final once the deal is completed. Other documents leaked earlier in the week suggest that Whole Foods plans to sell off at least 30 Wild Oats stores. The company has not confirmed it plans to do this.
Discussion Question: What's next for Whole Foods and Wild Oats now that the companies have apparently overcome the FTC's legal challenge to the planned merger of the companies? Do you see the combined companies being a much more formidable competitor together than they were separately?