Whole Foods Market, Inc., Austin, TX, and Wild Oats Markets, Boulder, CO have signed a definitive merger agreement under which Whole Foods Market will acquire Wild Oats Markets’ for $565 million. Whole Foods Market will also assume Wild Oats Markets’ existing net debt totaling approximately $106 million. This transaction represents Whole Foods’ largest-ever purchase.

Transaction Highlights:
•  Whole Foods Market offers $18.50 per share in cash, a 23% premium to the one-month average closing price;
• Transaction enterprise value, including debt, is expected to be approximately $700 million;
• Transaction to be funded at closing with $700 million of senior term loans; in conjunction with the transaction, Whole Foods Market also intends to upsize its long-term senior revolving credit facility to $250 million
• All of Whole Foods Market’s 11 operating regions will gain stores, with three of its smallest regions gaining critical mass, and Whole Foods Market will gain immediate entry into a significant number of new markets
• Whole Foods Market expects to recognize significant synergies through G&A cost reductions, greater purchasing power, increased utilization of support facilities and new team member talent.

“Wild Oats Markets and Whole Foods Market have both had a large and positive impact on the natural and organic foods movement throughout the United States, helping lead the industry to nationwide acceptance and to becoming one of the fastest growing segments in food retailing today,” said John Mackey, chairman, chief executive officer, and co-founder of Whole Foods Market. “Our companies have similar missions and core values, and we believe the synergies gained from this combination will create long-term value for our customers, vendors and shareholders as well as exciting opportunities for our new and existing team members.”

“The growth opportunity in this category has led to increased competition from many players, most of whom are not dedicated natural and organic foods supermarkets, but are considerably larger than we are,” said Mr. Mackey. “We have made 18 retail acquisitions in our history, many of which were platform acquisitions from which we have been able to accelerate our growth geographically. Wild Oats Markets will be our largest acquisition and is a great geographical fit as all of our 11 operating regions will gain stores and three of our smallest regions – our Pacific Northwest, Rocky Mountain and Florida regions – will gain critical mass. We will also gain immediate access into a significant number of new markets.”