Wild Oats Stock Price Rises Again Amidst News
As regular readers of NBN already know, Ron Burkle, the billionaire head of the Yucaipa Investment Group (and former Ralph’s chief) already controls 14.9% of Wild Oats. Sources at the EXPO told NBN this weekend that Burkle has greatly increased his shares of Wild Oats shares in the past few weeks.
Today’s announcement by Wild Oats that it has amended its shareholder rights agreement, confirms our source’s claims. This change was made to allow Ron Burkle to increase his Yucaipa Company’s ownership of Wild Oats to 20%, without triggering a so-called “poison pill” takeover defense, a built-in clause that protects a publicly traded company from unfriendly investors.
Burkle we’re told is also has a large investor in Cerberus. Cerberus Capital is the massive hedge fund, which with Supervalu and CVS purchased Albertson’s earlier this year. Cerberus, which will run 665 Albertson’s stores appointed former Wild Oats CEO Robert Miller as the leader of this effort, spurring Wild Oats stocks to rise sharply amidst news of a possible takeover of the ailing number two natural supermarket.
Today’s news has Oats stocks rising again to just under $20 a share
Cerberus, named after the mythical three-headed dog guarding the gates of hell, is an enormous hedge fund, with an investment strategy that Hoovers characterizes as keeping companies from flaming out. In other words it is noted for big buyouts of floundering companies. A Wild Oats buyout, while a big deal from NBN’s natural granola laden point of view, wouldn’t be such a big deal for an investor of Cerberus’ size.
However, given Whole Food’s unending ability to keep mesmerized Wall Street mesmerized, the potential for this deal will attract lots and lots of attention. Whether it’s merited, is another question.
What a deal like this will provide consumers and manufacturers is unclear, however, increased competition for Whole Foods would benefit, shoppers and vendors alike.
Long-term benefits are less likely. After all, the wild, wild world of venture capitalists who are inspired to name their companies after the hound guarding hell aren’t necessarily consistent with a vision of a sustainable future.