Shares of Whole Foods Market, Inc. (NASDAQ: WFMI) fell on Wednesday, a day after U.S. antitrust officials said they would seek to block the leading natural food retailerâ€™s proposed merger with Wild Oats Markets, Inc. (NASDAQ:OATS), the next closest competitor.
If Whole Foods is allowed to devour Wild Oats, it will mean higher prices, reduced quality, and fewer choices for consumers, the Federal Trade Commission's competition bureau director Jeffrey Schmidt said in a statement. That is a deal consumers should not be required to swallow.
The FTC unanimously voted to seek a temporary restraining order on the $565 million merger until the U.S. District Court for the District of Columbia resolves the FTC's request for a preliminary injunction. The complaint will be filed Wednesday.
Whole Foods said it will â€œvigorously challengeâ€ the FTC in court and will continue to pursue Wild Oats. It agreed to buy Wild Oats in February.
The company says that the FTC is unfairly singling out the retailer as a natural foods grocer, rather than looking at the companyâ€™s position relative to the overall grocery industry, which includes competing supermarkets that are increasingly adding more natural food to their merchandise.
Whole Foods, which has 195 stores in the U.S., Canada and U.K., would add 110 locations in 24 states and Canada by buying Wild Oats.
Shares of Whole Foods fell $1.41, or 3.48 percent, to reach $39.07 in mid-day trading on the Nasdaq Stock Market.
Wild Oats shares fell 18 cents, or 1.05 percent to reach $16.98.