Activist Burkle Going After Whole Foods (WFMI)

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Whole Foods Markets Inc. (NASDAQ: WFMI) has a new activist in its ranks.  An SEC filing showed that Ron Burkle’s Yucaipa Cos. investment vehicle is now holding a 7% stake in the organic and high-end grocery store operator.  The filing shows a 9.81 million share stake was taken.  This will also make it one of the top 4 shareholders if the most recent data is accurate. 

Burkle’s filing noted that it sees substantial opportunities for thecompany to improve operations and its pricing image while maintainingits high-quality product offering.  It has apparently been acquiringshares since November 24 as it believes that company is undervalued.

Yucaipa is noting the activist stance rather than a passive investmentstance right from the start.  The filing noted that the firm intends todirectly communicate with Whole Foods’ board of directors and itsmanagement, and noted that it may communicate with other shareholdersregarding the company. It also noted that it may solicit or vote itsshares to approve an extraordinary transaction such as merger orconsolidation or look to make changes to the composition or size of theboard of directors.

Burkle will probably also want to make sure he keeps founding CEO John Mackey from posting anonymous messages on the web.  Whole Foods closed at $10.01 yesterday and its 52-week trading range $7.04 to $42.48.

Jon C. Ogg
January 8, 2009