The US Court of Appeals has rejected a Federal Trade Commission move to block Texas-based Whole Foods Market's $565 million acquisition of rival healthy foods retailer, Wild Oats Markets.
The FTC had opposed the merger in June because it deemed it would lead to high prices and reduced competition. But the appeals court found that while the FTC had "raised some questions about the district court's decision" to allow the takeover, it was unlikely to meet the high legal requirement to prevail on appeal.
"We are pleased to have cleared what we expect to be our last legal hurdle," said Whole Foods chief executive John Mackey. "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."
"That's basically it," said David Balto, a former FTC official involved in the agency's challenge. "It's unfortunate because the judge's decision was wrong on a number of counts and the FTC presented a very persuasive case."
FTC argued that the merger would lead to the closure of as many as 30 Wild Oats stores but the district court ruling found the merger would not increase prices and reduce competition because of the increased presence of mainstream retailers like Kroger and Safeway in the healthy foods arena.
Colorado-based Wild Oats has a turnover of $1.2 billion in its 123 stores in 23 US states while Whole Foods has 197 stores in the US, Canada and the UK. It had sales of $5.6 billion in 2006.