BOULDER, Colo. -- Wild Oats Markets and Alfalfa's Markets, two natural foods retailers based here, said last week they have signed a letter of intent to merge. The transaction is expected to close in the spring. The merger would create a new company whose name has not yet been determined, a Wild Oats official told SN. It would operate 32 stores, with annual sales exceeding $200 million. The new company would be the second-largest volume natural foods chain in the United States, after Whole Foods Market, Austin, Texas, whose 43 stores had 1995 sales of $496 million. Hass Hassan, president and chief executive officer of Alfalfa's, would become president of the new company, and Mike Gilliland, president and CEO of Wild Oats, would be CEO. Wild Oats, founded in 1987, operates 21 stores: eight in Colorado, four in California, four in New Mexico, two in Kansas, two in Nevada and one in Missouri. The company said 1995 sales were $100 million, and it estimates 1996 sales will be $150 million. Alfalfa's, founded in 1979, has 11 stores: six in Colorado, three in Vancouver, British Columbia, one in New Mexico and one in Washington. The company said sales for fiscal 1995 were $65 million, with 1996 sales estimated to be $85 million. Since most of the new stores planned for 1996 are to be in California, they would operate under the Wild Oats name.