Los Angeles-based private equity firm The Yucaipa Companies has purchased a 7 percent stake in Nasdaq-listed organic grocery chain Whole Foods for $98.6 million, according to a regulatory filing.
The purchase of 9.8 million shares was made through a series of 17 transactions between 24 November 2008 and 7 January 2009 by mid-market buyout and growth funds the Yucaipa American Alliance Fund II and the Yucaipa American Alliance Parallel Fund II.
Austin, Texas-based Whole Foods, which maintains stores in the US, UK, and Canada, has had its earnings and stock price decline in recent months amid both real and anticipated cutbacks in consumer spending.
The stock price rose from roughly $9 per share when Yucaipa made public its investment on 29 December to about $12 per share at press time.
Whole Foods’ stock was undervalued at the time of Yucaipa's purchase and there “are substantial opportunities for the company to improve operations and its pricing image while maintaining its high-quality product offering”, according to Yucaipa, founded by billionaire supermarket mogul Ron Burkle in 1986.
The firm also recently purchased an 8.3 percent stake in book retailer Barnes & Noble for roughly $67.3 million due to its belief the stock was undervalued.
Yucaipa’s investment in Whole Foods follows a purchase by private equity firm Leonard Green & Partners of a 17 percent ownership interest for $425 million in November.