Whether the deal for the Henry's and Sun Harvest stores, whichare located in California and Texas, will be consummated depends onthe outcome of Whole Foods' efforts to resist the FTC's oppositionto the merger with Wild Oats. Whole Foods and Wild Oats Marketsstruck a deal in February for Whole Foods to acquire Wild Oats for$18.50 per share in cash, plus assumed debt, but the FTC hasapplied for an injunction to prevent the merger.

According to Whole Foods CEO John Mackey, the Henry's and SunHarvest stores that it proposes to sell to Smart & Final "donot fit into Whole Foods Market's long-term real estate and brandstrategy." Smart & Final is privately held and is controlled byApollo Management, one of the largest private equity firms in theworld. Operating under the Smart & Final and Smart FoodserviceCash & Carry banners, the company operates 255 nonmembershipwarehouse stores selling food and other products to bothtraditional household customers and small business owners inWashington, Oregon, Idaho, California, Arizona, Nevada, andNorthern Mexico.

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