Continue reading Whole Foods Market talks settlement with FTC

Whole Foods Market talks settlement with FTC originally appeared on BloggingStocks on Fri, 30 Jan 2009 12:50:00 EST. Please see our terms for use of feeds.

Whole Foods, New Seasons come to agreement over financial data originally appeared on BloggingStocks on Fri, 16 Jan 2009 20:00:00 EST. Please see our terms for use of feeds.

How do you de-merge two companies? The FTC thinks that the marriage of Wild Oats and Whole Foods (NASDAQ: WFMI) was anti-competitive. Too much concentration in the high-end organic food retail business.

The FTC brought charges against Whole Foods to stop the deal, but the agency did not get its bite at the apple until after the merger had closed. Now it wants to take apart what it sees as a firm created against the better interests of consumers.

According to The Wall Street Journal, the FTC wants all the stores that carried the Wild Oats name to take down their Whole Foods signs and put the old name back up. "The FTC also said it has asked Whole Foods to voluntarily halt further integration of the two companies while the FTC continues its legal challenge to the merger."

Killing a merger that is already done has to be fairly hard. If the FTC prevails, what does Whole Foods do? Does it hire a new management team and spin Wild Oats out into a new public company? Does it restate all of its recent financials to back out Wild Oats results?

From a legal standpoint, the FTC may be right, but rebuilding Wild Oats could kill the company, especially during a recession. The costs of turning it into a standalone operation could be so great that the financial burden would be more than the retailer could bear. Wild Oats might become independent again only to go bankrupt.

The government may be right, but it is not practical.

Douglas A. McIntyre is an editor at 24/7 Wall St.

The FTC wants to bring back Wild Oats originally appeared on BloggingStocks on Tue, 13 Jan 2009 11:55:00 EST. Please see our terms for use of feeds.

Continue reading Whole Foods fights back against FTC in rare corporate move

Whole Foods fights back against FTC in rare corporate move originally appeared on BloggingStocks on Tue, 09 Dec 2008 06:44:00 EST. Please see our terms for use of feeds.

If a new legal ruling forces Whole Foods to reverse its Wild Oats buy-out, WFMI shares could soar.

A federal appeals court has decided that the FTC's challenge of the merger between Whole Foods (NASDAQ: WFMI) and Wild Oats should have gone forward. A lower court has said the FTC had to cease its investigation into whether the marriage was anti-competitive.

According to The Wall Street Journal, "Jeffrey Schmidt, head of the FTC's competition bureau, said the agency is hopeful the ruling will ultimately allow the FTC to undertake a full review of competitive issues raised by the combined companies."

Whole Foods ended up with 74 Wild Oats stores, which it plans to cut down to 50. The FTC could ask the new company to close other locations in areas where the new parent has two stores, and, perhaps a monopoly for that region.

The FTC could also argue that the entire merger constitutes an antitrust threat. That news could not be better for WFMI shareholders. If Wild Oat has to be spun back out, it would need to re-brand its stores, add expensive management, and undertake its own marketing. In other words, it would be a severely weakened competitor for Whole Foods, instead of a thorn in the side of WFMI shareholders.

Shares in WFMI are off well over 40% this year. Stocks in many other major food retailers are closer to flat. Part of this may be due to the concern that premium products do poorly in a recession. But it may also have to do with the fact that Wild Oats stores were considered weaker as a group than the original Whole Foods chain.

If WFMI gets to rid itself of the company it got in the buy-out, its shares might get back from $22, near their 52-week low, to the $30 to $40 range.

Douglas A. McIntyre is an editor at 247walls.com.

If forced to dump Wild Oats, Whole Foods (WFMI) could see shares soar originally appeared on BloggingStocks on Wed, 30 Jul 2008 04:12:00 EST. Please see our terms for use of feeds.

FTC keeps up its attack on Whole Foods originally appeared on BloggingStocks on Thu, 25 Oct 2007 11:05:00 EST. Please see our terms for use of feeds.

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Analyst upgrades 8-27-07: AMZN, GIS and WFMI originally appeared on BloggingStocks on Mon, 27 Aug 2007 10:52:00 EST. Please see our terms for use of feeds.

Things looked pretty rough for the Whole Foods Market (NASDAQ: WFMI) bid to merge with smaller rival Wild Oats (NASDAQ: OATS). In late July, the Whole Foods CEO got himself in trouble over online message board comments and that pushed the stock to a 52-week low of $36. Then the FTC tried to block the merger on the grounds that putting the two companies together would create an operation that would raise prices on organic food.

Since late July, however, Whole Food shares are up 25% while Wild Oats trades just below its 52-week high, at $18.46. In August, short sellers cut their position in Whole Foods by 9.3 million shares to 15.1 million. It was the largest single drop in shares sold short for any company traded on the Nasdaq.

The FTC went so far as to take the fate of the merger to federal court, but both a District and Appeals Court failed to halt the merger. The first case was filed in June and, according to MarketWatch, asked the judge "for a preliminary injunction blocking the deal, pending a full review."

A successful merger is likely to have quick benefits for Whole Foods. Last quarter the smaller Wild Oats made only $1.9 million on almost $312 million of revenue. The organic food retailers costs need to come down.

Cutting those costs is likely to be the first thing that Whole Foods does.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Shorts bet on Whole Foods Market (WFMI) merger originally appeared on BloggingStocks on Mon, 27 Aug 2007 10:15:00 EST. Please see our terms for use of feeds.

Wal-Mart (NYSE: WMT) has been buying retail chains and entering joint ventures all over the world to improve its international exposure. Now, with same-store sale in the U.S. in trouble, it is setting up a unit to look at acquisitions in the U.S. as well.

According to the Financial Times [subscription], with UK retailer Tesco moving into the U.S. with its "Fresh & Easy" small format neighborhood groceries, Wal-Mart may think that it cannot afford to ignore the success of niche stores.

Wal-Mart could certainly use something to jump start sales in its home market, and groceries may be a good place to start.

There are several retailer operators that could end up on Wal-Mart's radar. One is likely to be Whole Foods (NASDAQ: WFMI), which is about to merge with competing organic food chain Wild Oats (NASDAQ: OATS). At the larger end of the market are operators like Kroger (NYSE: KR), which has a market cap of over $19 billion but has about 3,500 stores and annual sales of over $66 billion. Wal-Mart's market cap is $179 billion.

Wal-Mart needs a lot of help in the U.S. -- it may just buy itself a turnaround.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Wal-Mart (WMT) looks for M&A opportunities in the United States originally appeared on BloggingStocks on Mon, 27 Aug 2007 08:00:00 EST. Please see our terms for use of feeds.

The FTC's bid to block Whole Foods' (NASDAQ: WFMI) acquisition of Wild Oats (NASDAQ: OATS) has ended in failure. A three-judge panel of D.C.'s U.S. Court of Appeals rejected the government's appeal to have the merger blocked. The judges ruled that the FTC had failed to show that Judge Paul Friedman, who denied the government's motion a week ago today, had acted improperly. Last Thursday, the

Whole Foods says it will close the deal as soon as possible. CEO John Mackey likely remains on the hot-seat, and his anonymous message board ramblings are still the subject of an SEC investigation.

Now that the merger is done, investors can begin to discuss how the merger will impact Whole Foods as a stock. The FTC's effort to block it indicates that it should be very good indeed.

Whole Foods (WFMI) merger is on! originally appeared on BloggingStocks on Thu, 23 Aug 2007 18:46:00 EST. Please see our terms for use of feeds.

Continue reading Judge opines on the messy Wild Oats (OATS) buyout

Judge opines on the messy Wild Oats (OATS) buyout originally appeared on BloggingStocks on Wed, 22 Aug 2007 09:00:00 EST. Please see our terms for use of feeds.

Reuters has written that the progress in the Whole Foods (NASDAQ: WFMI) merger with Wild Oats (NASDAQ: OATS) may be a sign that other mergers being scrutinized by the US government may have an easier time of getting approval. Not likely.

The FTC has tried to block the Whole Foods deal because it may raised the amount that consumers have to pay for organic food. Of course, other food retailers offer these products, so the government's position was probably always a bit thin. The agency went to federal court to try to block the marriage, but was unsuccessful.

Now Reuters is floating the theory that the apparent success of the grocery store merger may make it easier for Sirius (NASDAQ: SIRI) to merge with rival satellite company XM (NASDAQ: XMSR).

The concept is full of holes. Sirius and XM are a de facto duopoly and, merged, would be a monopoly. Their ability to send satellite signals with radio content to receivers is not a business that any other company can enter. That is not really a bit like the Whole Foods situation.

The SIRI/XMSR merger is also a deal that faces opposition in Congress. Legislators want to know why they should countenance a business combination that not only lacks any competing technology but is also one that may use its position to raise rates over time.

The news about the Whole Foods merger may be good for it, but the deal has nothing to do with satellite radio.

Douglas A. McIntyre is a partner at 24/7 Wall St.

The fiction of Whole Foods (WFMI) helping other mergers originally appeared on BloggingStocks on Mon, 20 Aug 2007 07:30:00 EST. Please see our terms for use of feeds.

In spite of John Mackey's most self-destructive efforts at getting the merger he wanted so badly blocked,. it appears that it will go through. Although the FTC says it will appeal, Whole Foods Market (NASDAQ: WFMI) appears poised to acquire rival Wild Oats (NASDAQ: OATS). Shares of Whole Foods are up 6.3% on the news after-hours. Wild Oats, the buyout target, is seeing its stock soar almost 20%.

According to the Associated Press,U.S. District Judge Paul L. Friedman's filed a 93-page document (sealed because if contains trade secrets) denying the FTC's plea to block the deal. The FTC argued that the merger would lead to higher prices for consumers, and appeared to have compelling evidence based on internal documents from the company. The deal was referred to as "Operation Goldmine" at Whole Foods, and the company planned to shutter more than 25% of Wild Oats stores. Emails from Mackey to the company's directors referred to the acquisition as a way to "eliminate a threat" and avoid "price wars".

Mackey has got to be thrilled that the deal is going through. Aside from the obvious strategic benefits to his company, the failure of the deal would likely have been pinned on him. He would have become known as "Motor Mouth Mackey": The man who helped the FTC block an important acquisition because he couldn't shut his trap.

Judge won't block Whole Foods acquisition of Wild Oats originally appeared on BloggingStocks on Thu, 16 Aug 2007 17:36:00 EST. Please see our terms for use of feeds.

Given Whole Foods Market (NASDAQ: WFMI) CEO John Mackey's penchant for posting too much information on his blog/anonymous message boards, it might seem ironic that the company is considering suing the FTC for inadvertently posting the company's trade secrets on the internet.

On Tuesday, the FTC failed to completely redact Whole Foods' trade secrets from a court filing that was posted on an online database. Reporters caught the glitch, and information was leaked.

Some of the information that should have been redacted included an assertion that Whole Foods prevents its suppliers from selling directly to Wal-Mart (NYSE: WMT) in an effort to raise the retailer's costs.

Both Whole Foods and Wild Oats (NASDAQ: OATS) have an option to terminate the merger agreement if it does not gain regulatory approval by the end of the month.

Shares of Wild Oats continue to languish more than 20% below the agreed upon price, indicating investor skepticism about the deal's prospects.

Whole Foods (WFMI) mulls suing FTC originally appeared on BloggingStocks on Thu, 16 Aug 2007 08:15:00 EST. Please see our terms for use of feeds.

The battle over the proposed Whole Foods (NASDAQ: WFMI) acquisition of Wild Oats (NASDAQ: OATS) is getting even more complicated. In a U.S. District Court, two antitrust experts gave opposite opinions [subscription required] on whether the merger would be anticompetitive.

One expert argued that the two chains compete in a much broader market -- grocery stores -- with much bigger chains like Safeway and Kroger also in the space. But another expert discussed research suggesting that markets containing a Whole Foods and a Wild Oats store tend to have lower prices, which would suggest that they are in fact competing.

The U.S. District court is expected to issue a decision on the FTC's preliminary injunction seeking to block the merger some time in the next few weeks.

Given that this doesn't appear to be a black and white issue, as evidenced by disagreement among the experts, CEO John Mackey's "macho posturing" emails could end up looming large, as they seem to suggest that the merger is motivated by a desire to eliminate competition. Not only has he embarrassed himself and run into trouble with the SEC for his message board post, but he may also have harmed his company's growth prospects with his overactive typing fingers.

Experts mixed on Whole Foods buyout plans originally appeared on BloggingStocks on Thu, 02 Aug 2007 07:20:00 EST. Please see our terms for use of feeds.

Whole Foods earnings: Beating estimates organically originally appeared on BloggingStocks on Tue, 31 Jul 2007 18:40:00 EST. Please see our terms for use of feeds.

• Verizon Communications Inc (NYSE: VZ) to report Q2 earnings; conference call at 8:30am. Analysts will look at Verizon's marketing strategy [particularly for FiOS], infrastructure improvements, and operating expenses. Above-average debt remains a blemish, but Wall Street will overlook that if Verizon registers impressive subscription and market share statistics, and demonstrates that its fiber optic-based FiOS Internet/TV network roll-out timetable for major markets remains on schedule.
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• Federal District Court Hearing to decided whether to approve the FTC's application for injunction blocking the proposed merger between Whole Foods Market Inc (NASDAQ: WFMI) and Wild Oats Markets Inc (NASDAQ: OATS).
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Market highlights for next week: Verizon, Starbucks to report originally appeared on BloggingStocks on Fri, 27 Jul 2007 15:30:00 EST. Please see our terms for use of feeds.

Whole Foods Market Inc. (NASDAQ: WFMI) CEO John Mackey deserves the gold medal for understatement for calling his anonymous posts on Yahoo message boards an "error in judgment" in one of the least convincing apologies ever. Monumental stupidity is more like it.

What puzzles me about this issue is why a rich, successful and well-regarded CEO like Mackey would even care about the opinions of a bunch of chat board clowns? Is he really that narcisstic that he needs to constantly prove to his greatness? That's really kind of sad when you think about it.

Mackey now is making shareholders pay the price for his insecurity. The Wall Street Journal reports today that the SEC has launched an informal probe of his conduct. In particular, regulators are going to see if Mackey gave overly optimistic statements on the message boards, the paper said.

A special committee of the board also is investigating the matter, which came to light in part because of the regulatory review of its planned acquisition of Wild Oats Markets Inc. (NASDAQ: OATS) which has encountered stiff opposition.

Mackey, who co-founded Whole Foods, seems to be most sorry that he got caught. Any lower-level executive who did what he did would have been at a minimum reprimanded and possibly fired. Though Mackey says he meant no harm, he still needs to be taught a lesson.

Whole Foods should strip him of any options grants awarded to him this year. Mackey should also reimburse the company for any costs its incurred to defend him. Oh yeah, he should be banned from ever posting information on Yahoo chatrooms even under his own name.

He ought to have better things to do with his time.

Whole Foods CEO apologizes for acting like an idiot originally appeared on BloggingStocks on Wed, 18 Jul 2007 12:30:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Bear Stearns Companies Inc (NYSE: BSC) says that its two hedge funds tied to subprime loans are basically worth nothing, reported the Wall Street Journal (subscription required).
• An "error in judgment" is what Whole Foods Market Inc (NASDAQ: WFMI) chairman and CEO John Mackey called his anonymous blogging about his company and rival Wild Oats Markets Inc (NASDAQ: OATS) in an apology, reported the Wall Street Journal.
• SEC chairman Christopher Cox wants Congress to tighten its oversight of the $2.4T municipal bond market, the result of increasing complexities in the bond market and lax leadership at a number of firms, reported the Wall Street Journal.

• Kohlberg Kravis Roberts is planning to offer $24M to acquire Macy's Inc (NYSE: M), according to Women's Wear Daily (subscription required).
• The U.K. Times reported that Barclays plc (NYSE: BCS) has deided against raising its bid for ABN Amro Holdings (NYSE: ABN).
• Honda Motor Co. (NYSE: HMC) is increasing its production capacity in North America and in other places, in order to meet growing demand for its fuel-efficient cars and to maintain momentum for global growth, reported the Associated Press.

Newspaper wrap-up 7-18-07: Bear Stearns calls its two subprime hedge funds worthless originally appeared on BloggingStocks on Wed, 18 Jul 2007 09:15:00 EST. Please see our terms for use of feeds.

Carrying on in its heralded tradition of misguided editorials, The Wall Street Journal (subscription required) published a real doozie today. According to the piece:

Reading about the covert blogging of Whole Foods CEO John Mackey, we were reminded of a New Yorker Cartoon from some years ago featuring two mutts and a computer. "On the internet," one says to the other, "nobody knows you're a dog."

Apparently U.S. financial regulators don't get the joke. They're responding to Mr. Mackey's anonymous blogging by treating him like a dog -- or more precisely a potential violator of U.S. securities laws, with the bonus goal of scuttling Mr. Mackey's attempted purchase of Whole Foods competitor Wild Oats. The SEC is leaking (as usual) that it has opened an "informal" enforcement probe. Sure, "informal."

As Gary Weiss pointed out, the issue wasn't his blogging, which he didn't do anonymously. He was caught posting on Yahoo!'s message board for Whole Foods (NASDAQ: WFMI) without identifying himself. And his posts appear to have been pretty misleading: He talked down competitor Wild Oats (NASDAQ: OATS) while his company was pursuing its acquisition. It has also been reported that Mackey made predictions about the future stock price of Whole Foods, which is completely inappropriate.

The issue here is that Mackey's posts seem to fly in the face of Regulation FD and in defending him, the Wall Street Journal (or more specifically, its editorial page editors) is taking on that regulation. Shame on them.

Why is the WSJ defending Mr. Mackey? originally appeared on BloggingStocks on Mon, 16 Jul 2007 15:27:00 EST. Please see our terms for use of feeds.