Wacky Mackey of Whole Foods regrets Wild Oats deal

by Alexandra Biesada, June 17th, 2008, 7:00 am

Pity the long-suffering board members of Whole Foods Market who have to contend with founder and CEO John Mackey’s ill-considered blog outbursts. Mackey, who resumed blogging last month after a 10-month hiatus that resulted from the dust-up over comments he made under the online alias “Rahodeb,” has put his foot in his virtual mouth once again. But this time his comments weren’t posted to his CEO’s Blog, but instead appeared in an interview he gave in late May to another blog called Chews Wise.

Mackey, who can’t be accused of not speaking his mind, said “If I could go back in time, we wouldn’t have done the Wild Oats acquisition.” Say what?! The ink is barely dry on the controversial $565 million deal, which closed last August after a six-month battle with the Federal Trade Commission. The takeover also led to an investigation by the Securities and Exchange Commission following the revelation that “Rahodeb” had been secretly promoting his company’s stock and disparaging his rival’s management team in postings to a Yahoo stock message board. The investigation led to the suspension of Mackey’s blogging privileges until the SEC and the Whole Foods board completed their investigations. The good news, says Mackey in his blog, is that he’s free to post again “with the board affirming their complete support for me and the SEC recommending that no enforcement action be made against Whole Foods market or me.” The bad news, for Whole Foods shareholders anyway, is that Mackey still can’t keep his mouth shut.

Granted, his comments to Chews Wise focus more on the cost to him personally and the disruption to the company he built rather than the business merits of the deal: “We spent tens of millions of dollars in legal fees, we’ve been investigated, it’s been highly disruptive. I didn’t realize it would cause so much grief.” Really? The market leader in an industry with few competitors tries to takeover its #1 rival and he’s surprised by the FTC’s reaction? Don’t get me wrong. I supported the deal, because I viewed Whole Foods Market’s competitive universe more broadly than did the FTC. But Mackey and Whole Foods would have to have been incredibly naïve not to expect a messy fight. Indeed, the FTC is appealing the ruling that allowed the acquisition to proceed despite the fact that it’s a done deal.

Still, Mackey’s lukewarm support for the Wild Oats integration to date is less than encouraging. He says that from a “business perspective,” it’s too early to tell whether the merger will be an overall success” but added “We’re pretty happy so far.” How’s that for damning with faint priase? With food prices soaring and Whole Foods’ stock down nearly 40% since the acquisition, the board and shareholders would be better served by some outspoken cheerleading rather than Mackey’s characteristic candor.