FTC claims the merger will eliminate competition

The Federal Trade Commission will sue to stop a pending merger between rival natural foods grocers Whole Foods Market Inc. and Wild Oats Markets Inc.

Boulder-based Wild Oats has agreed to be acquired by Austin-based Whole Foods in a deal announced earlier this year.

Wild Oats said Tuesday it was informed the FTC will file a federal lawsuit to block the acquisition. The FTC claims the merger will eliminate competition in the natural-foods industry, therefore increasing prices and lowering quality.

Greg Mays, chairman and CEO of Wild Oats, said in a statement that the company disagrees with the FTC's position. He said the company is confident that the court "will agree that this merger is pro-competitive and the FTC's application for an injunction will be denied, thus allowing us to proceed forward with the merger."

He said Wild Oats would cooperate with Whole Foods in fighting the FTC in court.

Whole Foods is offering $565 million, or $18.50 a share, for all of Wild Oats' stock. The definitive merger agreement also calls for Whole Foods to assume Wild Oats' debt.

Wild Oats has 110 stores in 24 states and in Canada, while Whole Foods has 194 stores in the United States, Canada and the United Kingdom.