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Whole Foods hopes to win over Wild Oats shoppers

CHICAGO (Reuters) - Whole Foods Market Inc WFMI.O on Thursday laid out plans to show longtime Wild Oats Markets Inc OATS.O shoppers that the acquisition criticized by U.S. regulators can lead to lower prices and improved stores.

A Whole Foods store in an undated file photo. Whole Foods Market Inc on Thursday laid out plans to show longtime Wild Oats Markets Inc shoppers that the acquisition criticized by U.S. regulators can lead to lower prices and improved stores. REUTERS/Handout

Whole Foods said it would convert Wild Oats’ original full-service natural food store to a shop focused on value-priced products and items for shoppers in a hurry.

The plans for the Rocky Mountain region, which includes Wild Oats’ home base of Boulder, Colorado, were the first announced by Whole Foods since it closed the $565 million deal this week.

The U.S. Federal Trade Commission sued to temporarily block the deal, saying it would hobble competition in the market for natural and organic groceries. But a federal appeals court denied the agency’s request, and Whole Foods is now moving ahead with the acquisition, announced back in February.

Whole Foods said it would permanently cut prices at all 23 Wild Oats Market locations in the Rocky Mountain region, which includes Colorado, New Mexico, Kansas, Utah, Idaho and Kansas City, Missouri. It will also try to entice shoppers with a 10-percent-off weekend at Wild Oats locations in the region.

The first full-service Wild Oats store, which opened in 1987 and sits near the University of Colorado, will serve as an experimental base for Whole Foods Market Express. The store, on Baseline Road in Boulder, is just 18,500 square feet, while the average Whole Foods location is about 36,200 square feet. Whole Foods’ newer stores are even larger.

Whole Foods unveiled the new, small concept just as Britain's Tesco PLC TSCO.L prepares to open "Fresh & Easy" markets in the United States this fall. The Tesco stores, which will be around 10,000 square feet and emphasize ready-to-eat meals and fresh produce, are set to open in the southeastern United States.

Whole Foods said it would expand its own store in Boulder. But it will not open another store that Wild Oats had planned for that market and will either sublease or sell that space to a nonfood business.

Austin, Texas-based Whole Foods has found it generally takes up to two years to work on the transition process following an acquisition and expects this deal’s schedule to be similar, Chief Executive John Mackey said in a statement on Tuesday.

Wild Oats has already closed some underperforming stores, but more closures are expected. Whole Foods is selling Wild Oats’ 35 Henry’s and Sun Harvest stores and a distribution center to Smart & Final Inc, a Los Angeles-based food retailer.

Whole Foods has also said it may also relocate some Wild Oats stores that overlap with those it has in development.

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