Whole Foods files suit against FTC; PNC, NatCity deal to close by Dec. 31; BCE stock falls

By Cristal Cody

New York, Dec. 9 - Whole Foods Market Inc. on Tuesday went after the Federal Trade Commission, which wants to bust up its long-completed merger with rival Wild Oats, in a lawsuit that alleges the commission unfairly prejudged the deal.

In other activity, PNC Financial Services Group Inc. expects the $5.58 billion acquisition of National City Corp. to close by Dec. 31 despite numerous shareholder lawsuits, a spokesman told Prospect News.

Also on Tuesday, U.S.-listed shares of BCE Inc. dropped 9.36% to close at $17.81 as the market begins to assume the privatization deal will not close as scheduled on Thursday.

Negative views throughout Wall Street also sent stocks down after two days of gains.

The Dow Jones Industrial Average fell 2.72% to 8,691.33.

The Standard & Poor's 500 fell 2.31% to 888.67, while the Nasdaq Composite Index fell 1.55% to 1,547.34.

Whole Foods fights back

The Federal Trade Commission is not giving Whole Foods a fair deal, the company's executives said Tuesday in a press conference, after filing the lawsuit in U.S. District Court for the District of Columbia against the agency that oversees certain mergers.

The FTC said the deal could create a natural and organic foods monopoly but was denied its motion for a preliminary injunction to stop the $565 million merger in 2007 and a federal court ruled the deal could go on.

In July 2008, the U.S. Court of Appeals for the District of Columbia said the lower court underestimated the commission's chances to stop the deal when it denied the injunction request.

The FTC's case against Whole Foods is scheduled for trial in February.

Whole Foods said it has been given only five months to prove that it does not retain a stranglehold on the natural foods market in 29 locations, which has violated its due process rights.

Whole Foods also said it wants the case moved to an impartial federal judge.

John Mackey, Whole Foods' co-founder and chief executive, said the FTC has tried to get the company to agree to a settlement.

FTC representatives did not return a message for comment.

"The FTC has already prejudged this case," Mackey said. "We cannot get a fair trial in their system. Let the federal court system [decide] whether Whole Foods Markets needs to be broken up - and that's exactly what the Federal Trade Commission wants to do."

Whole Foods and Wild Oats already have integrated operations.

"The eggs have been scrambled. There is no more Wild Oats now," said Walter Robb, co-president and chief operating officer of Whole Foods.

Whole Foods shares fell 1.22% to close at $10.49. The stock has traded from $7.04 to $44.07 over the past year.

"You almost have to be a legal expert to know what the chances" are for Whole Foods' success in keeping the company intact, a market source said Tuesday.

PNC, NatCity deal on track

Pittsburgh-based PNC Financial Services Group and National City shareholders will vote on the deal Dec. 23.

"PNC expects the transaction to close by the end of the year, pending the result of the shareholder vote and regulatory approval," said spokesman Fred Solomon.

Cleveland-based National City shareholders have filed about a dozen lawsuits in courts in Delaware and elsewhere to oppose the sale and legislators have criticized the deal.

Solomon wouldn't comment on the litigation, but said he would "emphasize" the company expects the deal to close by Dec. 31 with approvals from shareholders and regulatory agencies.

National City shares fell 7.48% to $1.98 in closing.

PNC shares fell 6.51% to close at $52.12 Tuesday.

BCE stock drops

Bell Canada parent BCE said late Monday that it hired PricewaterhouseCoopers LLP to argue for a change in the initial review by auditor KPMG LLC.

KPMG said in November that its preliminary opinion was that BCE could not remain solvent because of the debt it would take to finance the $35 billion deal. The solvency approval is a condition of the deal's closing.

BCE was expected to be sold for C$42.75 a share to an investment group led by the Ontario Teachers Pension Plan Board and affiliates of Providence Equity Partners Inc., Madison Dearborn Partners LLC and Merrill Lynch Global Private Equity.

While BCE said in a statement that it continues to disagree with KPMG's preliminary view, the deal will be "unlikely to proceed" without a favorable opinion.

Mentioned in this article:

BCE Inc. NYSE: BCE

National City Corp. NYSE: NCC

PNC Financial Services Group Inc. NYSE: PNC

Whole Foods Market Inc. Nasdaq: WFMI

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