Whole Foods (WFMI) Buy-Out Of Wild Oats Back In Limbo

Here’s something you don’t see everyday: a recently completed merger facing more anti-trust scrutiny. But an appeals court has ruled that evidence of antitrust concerns in the Whole Foods/Wild Oats deal must reconsidered.

The New York Times reports that "in a 2-to-1 ruling, a three-member panel of the United States Court of Appeals for the District of Columbia Circuit, in Washington, sent the case back to a lower court to consider the evidence more fully."

The panel found that District Judge Paul L. Friedman did not adequately consider the impact the deal could have on consumers. Anti-trust experts told the Times that Whole Foods may have to halt its re-branding efforts until this contretemps is sorted out.

Here’s the irony: it’s likely that, given the deterioration of its own stock price since the merger, Whole Foods overpaid for Wild Oats. Shares of Whole Foods have been cut in half since the deal was first announced in February of 2007. Give the weakness the industry has faced, Whole Foods could probably buy Wild Oats for less today than it did when it made the deal. If the courts had blocked the deal before the integration had already begun, Whole Foods probably would have been better for it.

But now that that’s underway, this is a big mess for everyone involved.

Zac Bissonnette