Whole Foods Market And Wild Oats Merger Case Study Samples

Whole Foods Market was founded in 1978 by Mackey and Renesee Lawson Hardy with an initial capital of $45,000. Since then, it has continued to expand geographically from the 1980s by a combination of organic growth as well as the acquisition of small natural and health-food stores. The business went international in 2002 with Canada being the first overseas market and later the UK. On the other hand, Wild Oats was found by Gilliland and Elizabeth Cook in 1987. Like Whole Foods Market, the company operated health-food stores selling natural and organic food. After its successful growth, the company went public in 1996. Its growth strategy involved the development of new stores and acquisitions and in 2007, it was a leader in the natural foods industry with an annual revenue of $1.2 billion with the company operating 109 stores spread in 23 states and Canada with a workforce of 6,000 employees.
Whole Foods Market announced its plans to merge with Wild Oats on February 21, 2007, at the cost of $565 million but the plan was challenged by an antitrust lawsuit filed by Federal Trade Commission (FTC) on June 7, 2007, four months after the two companies entered into the agreement. Despite the lawsuits, Whole Foods Market team had begun to merge both companies with some stores being sold, others closed, and some converted into Whole Foods Market. As they continued with their integration, there were two possible outcomes pending court’s decision: the legal fees to be settled and how to undo the deal if the courts did not decide in favor of Whole Foods. The merger was a perfect deal for Whole Foods Market because they had not only similar values but also similar products but operating in different geographical locations. This would have given the company an edge to compete better with mainstream grocery stores. There were a lot of strategic decisions that needed to be made after the merger. However, with the government’s threat to its growth strategy and no decision from the court, John Mackey, the CEO, was at a loss for his next move.