business news in context, analysis with attitude

The Los Angeles Times reports that Ron Burkle’s Yucaipa Cos. investment group has acquired a seven percent stake in Whole Foods, saying that the company was being undervalued in the stock market and "that there are substantial opportunities for the company to improve operations and its pricing image while maintaining its high-quality product offering."

Whole Foods is the second big retailer in a week to find that Burkle suddenly was a significant shareholder. Last week, he acquired 8.3 percent of Barnes & Noble.

Burkle said in his filing with the US Securities and Exchange Commission (SEC) that he would "closely monitor the company's performance,” though for the moment he plans to just be an investor. That could change, he said, depending on other developments and opportunities.

could modify his plans depending on his investment company's evaluation of Whole Foods' "business prospects and financial position, other developments" and "opportunities."

As the Times reports, “Burkle built his fortune, which before the recent financial markets meltdown was estimated to be about $3 billion, buying and selling supermarket chains such as Ralphs, Alpha Beta, Fred Meyer Inc. and Food4Less.”

Whole Foods has its hands full these days. While it deals with declining revenues related to the recession, it also is waging war against the Federal Trade Commission (FTC), which continues to try to unravel its $565 million acquisition of Wild Oats, which was concluded more than a year ago.

KC's View:
Somehow, it doesn’t seem likely that Burkle is going to remain a passive investor in Whole Foods – that just isn’t his pattern. It is all a question of whether this is a long-term or short-term play…and when he deems it appropriate to make his move.