Court Refuses to Block Whole Foods/Wild Oats Combination Pending Appeal

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reports.

The U.S. Court of Appeals in Washington, D.C. has refused to block the combination of Whole Foods Market, Inc. and Wild Oats Markets, Inc. The FTC appealed an August 16 decision of the federal district court in Washington, D.C., denying the agency's request for a preliminary injunction. On August 23, the appellate court denied the FTC's request for an injunction pending appeal and dissolved an administrative injunction issued on August 20. Thus, the parties were free to proceed with their proposed combination.

According to the appeals court, the agency failed to show that the district court, in denying the preliminary injunction, abused its discretion by making clearly erroneous factual or legal findings.

"Although the FTC has raised some questions about the district court's decision, it has failed to make a 'strong showing that it is likely to prevail on the merits of its appeal,'" the appeals court said in a one-page per curiam opinion.

"We are pleased to have cleared what we expect to be our last legal hurdle," said John Mackey, Chairman and CEO of Whole Foods, on August 23. "We look forward to closing this merger and believe the synergies gained from this combination will create long-term value for our customers, vendors, and shareholders, as well as exciting opportunities for our new and existing team members."

Acceptance of Tendered Shares

On Monday evening, August 27, Whole Foods announced that it has accepted all of the shares tendered and not withdrawn for all of the outstanding shares of Wild Oats Markets common stock at $18.50 per share, net to the seller in cash without interest.

The tender offer and withdrawal rights expired at 5:00 p.m., Eastern Time, on August 27, 2007. A total of 25,175,997 shares of common stock of Wild Oats Markets were tendered and not withdrawn prior to the expiration of the offer, excluding an additional 3,795,973 shares subject to guaranteed delivery.

As a result of these purchases in the tender offer, Whole Foods Market will own approximately 84.1 percent of the outstanding shares of Wild Oats Markets common stock, effective Tuesday, August 28, 2007.

Approximately 12.7 percent of the outstanding shares of Wild Oats Markets common stock, represented by the shares subject to guaranteed delivery, will be purchased by Whole Foods Market as those shares are delivered during the next three business days.