Whole Foods Market has said that it is planning to sell 35 stores if it wins its case with the US Federal Trade Commission concerning Whole Foods Market’s merger with Wild Oats Markets.
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Whole Foods said that if it won its case with the FTC and closed the merger then it would transfer all 35 Henry’s and Sun Harvest store locations, and a California distribution centre to a wholly-owned subsidiary of Smart & Final Inc., a Los Angeles-based food retailer.
“We have determined that these stores do not fit into Whole Foods Market’s long-term real estate and brand strategy,” said Whole Foods Market CEO John Mackey. “It is important to us to ensure a smooth transition and to be open about our plans because of the employees and loyal shoppers at these locations. We believe both will be well served by Smart and Final’s business focus.”
Smart & Final is privately held and controlled by Apollo Management, L.P., one of the largest private equity firms in the world. Operating under the Smart & Final and Smart Foodservice Cash & Carry banners, the company operates 255 non-membership warehouse stores selling food and foodservice products to both traditional household customers and small business owners in Washington, Oregon, Idaho, California, Arizona, Nevada, and Northern Mexico.
In February this year, Whole Foods Market agreed to acquire Wild Oats Markets. But earlier this month, the US District Court for the District of Columbia scheduled a preliminary injunction hearing to decide whether to approve the FTC’s application for an injunction to block the proposed merger between the two companies.
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By GlobalDataThe FTC is challenging the merger between Whole Foods and Wild Oats on competition grounds. The body argues that the relevant competitive arena should be limited to natural and organic food stores and not include conventional supermarkets.
George Golleher, chairman and CEO of Smart & Final said: “Smart & Final and Apollo are both very excited about the opportunity to acquire the Henry’s Farmer’s Market and Sun Harvest banners, particularly given the tremendous consumer interest in natural foods and high quality perishable offerings. We believe that the Henry’s and Sun Harvest formats have the potential for significant new store growth and we intend to invest in the Henry’s and Sun Harvest store base with a goal of opening a significant number of new stores over the next two to three years.
“In addition, we believe there are enhancements to the business that will serve to further accelerate comparable store sales growth and we look forward to working with all of the Henry’s and Sun Harvest employees in further developing these exciting formats. Henry’s and Sun Harvest will be wholly-owned subsidiaries of Smart & Final and will continue with their focus on natural and organic foods. In addition, existing management of these formats will continue in their current roles.”
