Whole Foods/Wild Oat Merger

One of the biggest companies that sells organic goods is Whole Foods. The acquisition of Wild Oat was announced by the firm and Wild Oat in 2007. But these businesses signed a merger deal. Due to the numerous advantages that each organization stood to reap, the two organizations amalgamated. As a result, it will be crucial to evaluate the situation in order to identify the numerous synergies related to the proposed merger. Synergy is the collaboration or interaction of two or more entities, people, or things to create a combined impact that is greater than the sum of their individual effects.

Because the merger served to end competition between the two organizations, everyone benefited. Whole Foods and Wild Oat had been competing with one another heavily in the industry. At the same time, this gave them a chance to put their efforts together to competitive favourably with other giant firms such as Walmart. They were able to increase quality of their services. The two firms were invested considerably into each other’s stores to upgrade and improve them.

Further, the merger led to synergistic geography as the stores for each of the organisation are spread across the United States. Both Whole Foods and Wild Oat entered into new markets where they did not have stores which provided critical scale in several regions where each was smaller and lacked enough scale. Moreover, most of the stores from each side were moved to larger locations. There are places where Wild Oat had stores and Whole Foods did not. As such, the merger gave each of these companies entry to new markets allowing them to build relationships with thousands of customers. This was a great value for each because it is often expensive to enter a new market and compete well.

Further, the merger helped the two companies strengthen their sales. The two were forced to close some of the stores. For Wild Oat, they organisation close several stores close to Whole Foods’. As a result, the customer base was transferred to those Whole Foods. Wild Oat gained same benefits. In other words, these are viewed as redundant store and closing them led to part of the business being transferred to the Whole Foods store something that resulted in increased profits. In addition, closing those stores led to significant increase in after-tax profits. Also, it is critical to note that Wild Oat stores were smaller than Whole Foods’. Therefore, this corporation accessed bigger stores through the merger which translated to increased sales. The merger helped them to leverage their financial position significantly as indicated in the case study. This savings flowed directly to the two corporation’s bottom lines.

At the same time, it is critical note that the merger helped the two firms lower their prices. Before the agreement, Whole Foods prices were relatively lower in areas where the institution competed with Wild Oat. Therefore, integration of these companies contributed toward reduction of prices of the products and services offered. They were able to purchase products cheaply because of greater scale gained. They attained synergies through the G&A cost reduction, increased utilization of support from each other’s facilities, greater buying power, and new team member talents. According to the information provided in the case study, Whole food possesses G&A higher than Wild Oat which means the two firms gained financial leverage.