Organic and healthy food giant Whole Foods Market has finally closed its US$565 million (£282 million) acquisition of rival Wild Oats Markets this week, after months of delays as federal antitrust authorities sought to block the deal.
Whole Foods chief executive and chairman John Mackey said: “We believe the merger will create long-term value for customers, vendors and shareholders.”
He estimates it will take up to two years to move across to Whole Foods’ decentralised operating model and to implement its incentive programmes.
Whole Foods expects the merger to deliver significant cost savings, greater purchasing power and more customers.
However, the healthy food giant plans to close some Wild Oats stores. In a statement, Whole Foods said: “Wild Oats Markets has been rationalising its store base over several years to shed underperforming stores, but some additional store closures are expected as well as the relocation of some stores that overlap with stores Whole Foods Market has in development.”
It has also vowed to make significant investment in upgrading and improving stores before eventually rebranding them Whole Foods Market stores.
Whole Foods Market has 197 stores in the US, Canada and the UK and generated total sales of US$5.6 billion (£2.8 billion) in its 2006 financial year.
Whole Foods’ acquisition, which had been agreed in February, has been a protracted and hard-fought battle. This is primarily because the US Federal Trade Commission filed a legal suit in June to block the proposed deal on antitrust grounds.
Last week, a federal appeals court in Washington DC denied a request from the FTC to stop the deal proceeding.
Whole Foods Market has entered into a five-year US$700 million (£349 million) senior term loan agreement to fund the US$18.50-a-share transaction and has signed a new five-year US$250 million (£125 million) revolving credit agreement.
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