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Whole Foods Shares Up on Yucaipa Investment

Stock in Whole Foods Market was up more than 22% Thursday after funds associated with Ron Burkle’s Yucaipa Cos. revealed they had acquired 7% of the retailer on the open market.

Jon Springer, Executive Editor

January 9, 2009

2 Min Read
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JON SPRINGER

AUSTIN, Texas — Stock in Whole Foods Market here was up more than 22% Thursday after funds associated with Ron Burkle’s Yucaipa Cos. revealed they had acquired 7% of the retailer on the open market.

A filing with the Securities and Exchange Commission showed Yucaipa had been acquiring stock in Whole Foods on the open market at prices between $8.94 and $10.53 per share since late November. The 7% stake in Whole Foods would make Yucaipa the retailer’s fourth-largest shareholder and the second significant investor to invest in the struggling retailer since Leonard Green and Partners acquired 17% of the company in November in a move to help Whole Foods fund ongoing expansion and debt service.

Yucaipa has a long history of investing in supermarket operators, including Wild Oats Markets, the onetime rival to Whole Foods that Whole Foods acquired in 2006. Yucaipa’s former investments include Pathmark Stores, which, like Wild Oats, was sold to a rival in a deal Burkle had a hand in engineering.

Typically, Yucaipa takes stakes in companies trading at low valuations, then seeks board seats and often installs its own managers. Scott Van Winkle, an analyst at CanaccordAdams, Boston, told SN that Yucaipa’s investment heralds a change in the entrepreneurial posture of the iconic natural foods retailer.

“Between Green Investments, and now Ronald Burkle, I think we’re seeing a pretty high-quality, intelligent long-term shareholder base coming into Whole Foods that I think has got to give people confidence that Whole Foods has a business model that can be real successful over the next several years as they make some changes,” Van Winkle said. “You’re seeing a change, from an entrepreneurial founder’s focus on growth to the next level of growth.”

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About the Author

Jon Springer

Executive Editor

Jon Springer is executive editor of Winsight Grocery Business with responsibility for leading its digital news team. Jon has more than 20 years of experience covering consumer business and retail in New York, including more than 14 years at the Retail/Financial desk at Supermarket News. His previous experience includes covering consumer markets for KPMG’s Insiders; the U.S. beverage industry for Beverage Spectrum; and he was a Senior Editor covering commercial real estate and retail for the International Council of Shopping Centers. Jon began his career as a sports reporter and features editor for the Cecil Whig, a daily newspaper in Elkton, Md. Jon is also the author of two books on baseball. He has a Bachelor of Arts degree in English-Journalism from the University of Delaware. He lives in Brooklyn, N.Y. with his family.

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