Whole Foods moves to settle with FTC; Amylin sale not expected in Icahn's wake; Wyeth shares fall

By Cristal Cody

New York, Jan. 29 - In what one analyst called more than unusual, Whole Foods Market, Inc. could be forced to sell off the former Wild Oats Markets Inc. stores it acquired in 2007.

Moving to other deal rumblings, Amylin Pharmaceuticals Inc. shareholder Carl Icahn intends to nominate five directors to the company's board, according to a regulatory filing on Thursday.

Although Icahn's style includes pushing for company sales, Amylin is not a likely acquisition candidate in the current market, an analyst told Prospect News.

One pharmaceutical deal continues to stay cold days after the offer.

Wyeth shares fell 23 cents, or 0.52%, to close at $43.62. Pfizer Inc. offered on Monday to buy the company for $50.19 a share, which includes $33.00 in cash and 0.985 of a share of its stock for each Wyeth share.

On Wall Street Thursday, the markets took a hit on a barrage of economic concerns.

The Dow Jones Industrial Average fell 226.44 points, or 2.70%, to 8,149.01.

The S&P 500 index lost 28.95 points, or 3.31%, to close at 845.14, and the Nasdaq Composite index fell by 50.50 points, or 3.24%, to end the day at 1,507.84.

Whole Foods dilemma

The Federal Trade Commission on Thursday agreed to Whole Foods' request to suspend the case until Feb. 5 to hold settlement negotiations.

"They've got a losing hand and they're going to try to put the best face on it," a market observer said Thursday.

Whole Foods has already integrated most of Wild Oats' stores, but a court ruling last year allowed the commission to renew its challenge to the deal.

The commission has an administrative trial over the $565 million merger set for April 6.

The trade commission could require Whole Foods to rebrand or spin off the former Wild Oats stores.

Scott Mushkin, an analyst with Jefferies & Co., said that type of undertaking is beyond difficult.

"The FTC has been pushing for some breakup of the acquired assets. What that will be is anybody's guess," he said. "But to call it normal would be a stretch."

Earlier this month, Ron Burkle's Yucaipa Cos. accrued a 7% take of Whole Foods' outstanding stock. According to a regulatory filing, Yucaipa planned to talk with Whole Foods' board to take action to increase shareholder value, and his involvement may be the catalyst for settlement talks with the government.

Jim Sud, Whole Foods' executive vice president of growth and development, said in a statement on Thursday that the company welcomes the opportunity to "hold constructive discussions directly with the commissioners as well as the FTC's attorneys."

Whole Foods' shares fell $1.08, or 9.06%, to close Thursday at $10.84.

Amylin board shakeup

In a filing with the Securities and Exchange Commission, Icahn Capital LP said it has had discussions with Amylin on board representation but did not reach an agreement.

Icahn and affiliates hold 8.3% of Amylin shares.

The push for new leaders doesn't necessarily mean a sale is ahead, Jason Butler, an analyst with Rodman & Renshaw LLC, said in an interview Thursday.

"[Icahn] likes to make his presence known every now and then. He did this with Biogen [Idec Inc. and] asked for the company to be put up for sale," Butler said. "He's obviously increased his interest in Amylin. I wouldn't say this makes an acquisition or the company putting itself up for sale more likely."

That's because Amylin isn't a high-priority acquisition candidate in the current market, he said.

"Eli Lilly is the most obvious acquirer and they have their hands full with the recent acquisition of Imclone," Butler said. "Anybody else to come in to make an offer is unlikely because of Lilly's partnership with Amylin."

Amylin said in a statement that the company has not received the required notice of Icahn's plans.

"Amylin's corporate governance committee is engaged in a process to recommend a slate for election at the company's annual meeting. It is reviewing potential nominees suggested by shareholders as part of that process, including two individuals previously discussed with representatives of the Icahn funds," the company said.

Amylin shares rose 37 cents, or 3.47%, to $11.03 in trading Thursday.

Wyeth shares fall

Wyeth shares continued to close well off Pfizer's $68 billion cash-and-stock offer made on Monday.

An analyst told Prospect News that the market holds concerns over whether Wyeth shareholders will approve the buyout or hold out for a higher offer.

The companies expect the deal to close late in the third quarter or in the fourth quarter of 2009.

Pfizer's stock closed on Thursday at $15.12, down by 32 cents, or 2.07%.

Mentioned in this article:

Amylin Pharmaceuticals Inc. Nasdaq: AMLN

Pfizer Inc. NYSE: PFE

Whole Foods Market, Inc. Nasdaq: WFMI

Wyeth NYSE: WYE

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