After, what, nearly two years now, the FTC and Whole Foods settled their legal battle over Whole Foods acquisition of Wild Oats.
As I wrote many times previously, I thought the heavy handed federal action was misguided because its premise -- that Whole Foods would control the natural and organic marketplace -- was flawed. They didn’t then and certainly don’t now.
So here’s what happened to the original 109 Wild Oats stores bought by Whole Foods in February 2007 for $565 million.
- 14 stores were closed and 6 were relocated.
- 35 stores were sold to Apollo Management in June 2007.
That left 54 stores, 12 of which are now for sale (plus one additional Whole Foods Market store) under the deal. If the stores don’t sell in one year, then Whole Foods gets to keep them. If they do sell, then Whole Foods ends up with 42 of the original 109 stores it bought.
In addition, the closed stores -- which total 19 if you include those shuttered by Wild Oats before the deal -- will be sold, along with Wild Oats trademarks. Presumably those shuttered stores were already on the auction block.
The FTC said:
The consent order will restore competition in 17 geographic markets that were impacted by the acquisition. In addition to requiring the transfer or divestiture of all rights to 32 stores, Whole Foods also is required to divest related Wild Oats intellectual property, including unrestricted rights to the “Wild Oats” brand, which retains significant name recognition and loyalty among consumers. These assets will allow one or more Commission-approved buyers to re-establish competition with Whole Foods in the majority of the markets in which the agency alleged the acquisition would reduce competition and harm consumers through higher prices and reduced quality and services.
But the way I see it, this battle costing untold millions came down to 12 operating Wild Oats stores -- or 11% of the total Whole Foods acquired. Those stores created a monopoly? Go figure.
- Samuel Fromartz