Whole Foods buys Wild Oats

Wild Oats Markets, whose largest shareholder is L.A. billionaire Ron Burkle (technically Burkle's investment arm, Yucaipa), is being sold to Whole Foods Market for about $565 million. Whole Foods is offering $18.50 a share, which is a 23 percent premium over Wild Oats' one-month average closing price. (The stock was under $16 today.) Already, Whole Foods is talking about "significant synergies" through cost reductions in overhead, which makes you wonder what will happen to some of the Wild Oats markets in the L.A. area. (In Santa Monica, there's a Wild Oats at 5th and Wilshire and 14th and Montana, and a Whole Foods at 23rd and Wilshire.)

The deal is not much of a surprise. Wild Oats sales have been decent but not spectacular - disappointing, really, to many on Wall Street, considering that the organic food business is on a tear. Last fall came word that Wild Oats would not renew the contract of CEO Perry Odak, who had been running things since 2001, when the chain was on the verge of filing Chapter 11. He closed stores, eliminated jobs and got the place running again, but obviously not to everybody's satisfaction. Burkle, who has a 17 percent stake in Wild Oats, probably played a role in both Odak's departure and the Whole Foods' purchase (Gregory Mays, who is on the board of Burkle-controlled Pathmark Stores, took over as interim CEO when Odak resigned.)

Some background: Wild Oats was founded in 1987 by Michael Gilliland and his wife, Elizabeth Cook, who purchased a vegetarian food store in Boulder. The chain grew not by pushing prepared foods and premium-cut meats - the Whole Foods model - but by sticking to more traditional organic foods. It really is more like a health food supermarket, which might have been a mistake (more bean sprouts - yum!). The company now has 110 stores in 24 states and Canada.