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The Honolulu Advertiser
Posted on: Thursday, August 16, 2007

Whole Foods takeover bid turns bitter

By Michael Nol and Bob Van Voris
Bloomberg News Service

Hawaii news photo - The Honolulu Advertiser

Jodi May shops with her daughters, Issa, 7, left, and Raina, 6, at the Wild Oats Natural Marketplace in Woodmere Village, Ohio. The FTC is trying to block the acquisition of Wild Oats by Whole Food Markets.

ASSOCIATED PRESS FILE PHOTO | July 2007

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NEW YORK — Wild Oats Markets Inc. may have retaliated against former Chief Executive Officer Perry Odak, who testified in the government's bid to stop a takeover by Whole Food Markets Inc., the biggest U.S. natural foods grocer, lawyers for the Federal Trade Commission said.

Odak, who led Boulder, Co.-based Wild Oats from 2001 until he left the company in October, testified in a probe that led to the FTC's suit to block the acquisition, the agency said in court papers dated Aug. 3.

"After receiving the transcript of Mr. Odak's testimony, the defendants appear to have withheld certain payments due to Mr. Odak," the FTC said in the papers, posted yesterday on the federal court docket in Washington. "Not surprisingly, Mr. Odak was perturbed by what he identified as retaliation on the part of Wild Oats."

The FTC filing didn't indicate the amount of money allegedly withheld from Odak. Wild Oats management denies the claim, company spokeswoman Sonja Tuitele said. Whole Foods spokeswoman Kate Lowery declined to comment.

Whole Foods, which plans to open at least four stores in Hawai'i over the next few years, agreed in February to pay $565 million to buy Wild Oats. The FTC sued both companies in June to block the takeover, claiming it would violate U.S. antitrust law and give Whole Foods control of too much of the organic foods market.

Whole Foods argued it would get only a small part of the overall market for groceries.

Whole Foods said yesterday it's investigating what it called the "apparent improper release" by the FTC of secret business information related to the acquisition. The information included plans to close at least 30 Wild Oats stores, a move that could double sales at Whole Foods in those markets, the Associated Press reported yesterday.

The documents also said Whole Foods haggles with suppliers to increase costs for Wal-Mart Stores Inc., AP said.

Blacked-out portions of a document filed by a lawyer for the FTC could be read easily, AP said.

Court officials later blocked public access to the document, then posted a new one that corrected the problem, AP said.

In a court filing July 13, the FTC said that Odak testified about the delay in opening a store in Boulder. Odak said a Wild Oats lawyer "told me exactly why this store was stopped ... which flies in the face of what Wild Oats has told the FTC," Odak said.

"I watch what a corporation does to try to denigrate me ... as to why this store is not open," Odak said in testimony before the FTC. "I think that speaks volumes in terms of the ... amount of ethics that this corporation is operating under right now."

In yesterday's court filing, the FTC said Whole Foods Chief Executive Officer John Mackey told company directors that buying Wild Oats would avoid "nasty price wars" between the two grocers in Boulder; Portland, Ore.; Portland, Maine; Nashville, Tenn., and several other cities.