Whole Foods Smells Weakness, Buys Wild Oats

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Whole Foods, the Wal-Mart of organic and health food, announced yesterday it will acquire rival chain Wild Oats for $565 million.

Whole Foods made the decision to pursue Wild Oats after the chain suffered a debilitating sequence of mishaps in late 2006. In November, Wild Oats’ CEO resigned over contract disputes, and the company closed 8 underperforming stores. The cost of the closings was more than $25 million, and Wild Oats’ CFO resigned in December.

“I thought, gosh, maybe this would be a good time to approach Wild Oats,” said Whole Foods’ CEO/Founder, John Mackey. Mackey said the acquisition deal with Wild Oats’ interim CEO, Gregory Mays, came together in a matter of weeks.

Currently, Wild Oats has 72 stores in 22 states. Whole Foods has 193 stores in 32 states, the U.K., and Canada. Despite Whole Foods’ commitment to the environment, organic goods, and animal rights (they recently stopped selling live lobster except in Maine), the company has been vocally criticized for their flat denial to provide a worker’s union. CEO Mackey memorably compared unionization to herpes, saying: “It doesn’t kill you, but it’s unpleasant and inconvenient and it stops a lot of people from becoming your lover.” Whole Food also imports much of its organic produce.

Whole Foods most recently opened stores in London, Brooklyn, and Portland, Maine, and a huge new store in New York City’s historic–but rapidly gentrifying–Lower East Side, on a spot formerly occupied by one of the city’s largest Jewish theaters.

–Jennifer Phillips

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