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Burkle Sows More Wild Oats

Famed supermarket investor Ron Burkle appears to have wooed Wild Oats Market (OATS) in his bid to raise his ownership stake in the company.

Burkle, through his hedge fund, Yucaipa, increased his stake in the organic foods chain to 15%, and the company amended its shareholder rights agreement to allow him to buy up to 20% of its stock.

Wild Oats said in a regulatory filing Tuesday that it amended an earlier rights agreement with Wells Fargo Bank (WFC) to exclude Burkle and Yucaipa from the definition of "acquiring person." This allows the firm to acquire beneficial ownership up to 20% of Wild Oats' outstanding common stock without triggering its so-called poison pill, a mechanism designed to prevent takeovers from outside investors.

"This indicates that Wild Oats looks at Burkle as a potential acquirer positively," says Scott Van Winkle, analyst with Canaccord Adams. "It's not like he's going to make a run at the company without their cooperation. The only reason to have a shareholder rights plan is to avoid acquisitions you don't want, so this means they probably have interest in having Burkle buy them."

But Sonja Tuitele, a Wild Oaks spokeswoman, downplayed Burkle's moves.

"Anything can happen, but I wouldn't take this as a sign [that Burkle is trying to take control of the company]," Tuitele says. "If his stake went above 20%, then we would be getting into control issues, but he has said he wants to remain a passive investor. He has not asked for a board seat. He likes the progress we're making, and he thinks this is a good space to be involved with, so he wanted to increase his ownership stake."

Burkle is no stranger to the process of buying grocery chains. Long a proponent of consolidation in the supermarket industry, he bought Chicago-based Dominick's for $700 million in the 1990s and sold it to Safeway (SWY) three years later for $1.8 billion. He was also chairman of grocery chain Fred Meyer while Wild Oats' current chairman, Robert Miller, was CEO.
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