Planet Organic Health Corp, Canada's largest natural foods retailer, is set to buy New Leaf Community Markets for US$9.75m.

The acquisition will be funded by the issuance of 1.2m shares in Planet Organic at a price of $2.50, with the balance of $6.75m to be paid in cash. The acquisition is scheduled to close in April.

New Leaf is a leading natural foods retailer in Northern California, with three locations in and around the city of Santa Cruz. New Leaf generated revenues of $26.4m in fiscal 2007.

"We are extremely excited to work with a leading management team in expanding New Leaf throughout the western United States," said Darren Krissie, Planet Organic's CFO. "I am very pleased that the New Leaf team has decided to join the Planet Organic organisation.