Whole Foods and Wild Oats are competitors no longer. Yesterday, the two companies announced a $65 million deal for Whole Foods to acquire Wild Oats.
"The growth opportunity in this category has led to increased competition from many players, most of whom are not dedicated natural and organic foods supermarkets, but are considerably larger than we are," Whole Foods Chief Executive John Mackey said in a statement. "The timing for our two companies to join forces could not have been better."
The deal put to rest speculation about whether Wild Oats would be acquired by a traditional supermarket. The company has begun selling its own brand products in a number of traditional grocery stores.
"Offense is the best defense," Ken Harris of Cannondale Associates told Reuters. "They were either going to buy Wild Oats, or somebody else was going to do it."
Mark Husson, an analyst with HSBC, said he was taken by surprise with the deal announcement but had a similar take to Mr. Harris. "Clearly, if they are not fighting each other, they have a much better chance of fighting the competition," he told The New York Times.
Darrell Rigby, head of global retail practice at Bain & Company, said, "Whole Foods is a very strong company facing a mature market and better competition, and that will require an even better strategy than they've had in the past.
"In order to continue growing, you can't just appeal to the upscale consumers that converted to Whole Foods long ago," he said. "You have to attract new customers as well."
Discussion Question: What is your reaction to Whole Foods buying Wild Oats?