Whole Foods Selling Henry's, Sun Harvest

Whether the deal for the Henry's and Sun Harvest stores, which are located in California and Texas, will be consummated depends on the outcome of Whole Foods' efforts to resist the FTC's opposition to the merger with Wild Oats. Whole Foods and Wild Oats Markets struck a deal in February for Whole Foods to acquire Wild Oats for $18.50 per share in cash, plus assumed debt, but the FTC has applied for an injunction to prevent the merger.

According to Whole Foods CEO John Mackey, the Henry's and Sun Harvest stores that it proposes to sell to Smart & Final "do not fit into Whole Foods Market's long-term real estate and brand strategy." Smart & Final is privately held and is controlled by Apollo Management, one of the largest private equity firms in the world. Operating under the Smart & Final and Smart Foodservice Cash & Carry banners, the company operates 255 nonmembership warehouse stores selling food and other products to both traditional household customers and small business owners in Washington, Oregon, Idaho, California, Arizona, Nevada, and Northern Mexico.

A hearing on the FTC's request for an injunction to block the merger of Whole Foods and Wild Oats is scheduled to begin on July 1 in the US District Court for the District of Columbia and to conclude on Aug. 1. Until the hearing begins, Whole Foods and Wild Oats have consented to a temporary restraining order, but the two companies are cooperating to challenge the FTC's opposition to the merger.

According to George Golleher, chairman and chief executive officer of Smart & Final, both his company and Apollo see potential for significant new store growth in both the Henry's and Sun Harvest formats. "We intend to invest in the Henry's and Sun Harvest store base with a goal of opening a significant number of new stores over the next two to three years," Golleher said.