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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