Breaking Up Whole Foods (WFMI)

Investing

Published: August 12, 2008 5:33 am

Whole_foods Now that courts have let the FTC have another bite at the Whole Foods (WFMI) merger with Wild Oats, it plans to examine the deal within an inch of its life. If the agency proves that the marriage is indeed anti-competitive, it will be interesting to see how it plans to de-merge the company.

According to The Wall Street Journal, the FTC might "open the possibility that it could try to halt further integration of the two companies or require Whole Foods to sell some operations." That probably won’t work. What firm would want to buy a small set of health food stores and then compete with the larger and more well-established Whole Foods franchises?

The other option is to simply separate the two companies. Give Whole Foods shareholders stock in each operation. Get new management for Wild Oats, and let the companies go back to warring with one and other. That may be an odd-ball approach, but it may be the only solution that works.

Douglas A. McIntyre

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