Shares of Boulder natural grocer Wild Oats Markets Inc. gained more than 7 percent Monday on news that billionaire supermarket investor Ron Burkle raised his stake in the company.
Burkle’s company, Los Angeles investment firm The Yucaipa Cos. LLC, increased its ownership to 14.9 percent from 9.2 percent, according to federal documents filed late Friday.
“He’s betting that the current course of business is going to prove financially rewarding or betting that, with some changes, Wild Oats can ultimately be a more formidable competitor in this space,” said Ed Aaron, an analyst with RBC Capital Markets.
Burkle has invested in a range of industries, but he’s best known for buying and selling struggling supermarkets. He sold Chicago-based Dominick’s to Safeway for $1.8 billion in 1998 after purchasing it three years earlier for $700 million. His investments also include the Fred Meyer, Food 4 Less and Ralphs chains, all of which were sold to Kroger in 1999.
Burkle’s latest investment in Wild Oats has led some analysts to believe the activist investor is eyeing a larger role in the company. Although the filing indicates the latest transactions are for investment purposes, it also suggests Burkle intends to take a more hands-on approach.
The company “may engage in discussions or negotiations with other persons or entities regarding potential strategic transactions involving the company and other supermarket and retail companies,” the filing said.
Previously, Burkle said he would engage in conversations with other entities, but he did not specifically refer to supermarkets.
“This represents a dramatic change and could foreshadow more aggressive efforts by Yucaipa to increase visibility on the earning power of the underlying business,” Bear Stearns analyst Robert Summers said in a research note issued Sunday.
Burkle did not return messages Monday.
After his initial investment in Wild Oats a year ago, Burkle told the Los Angles Times he bought into the company because he believed in the growth potential of the natural-foods sector and because of his confidence in Wild Oats chairman Robert Miller.
Wild Oats spokeswoman Sonja Tuitele said the company views Burkle’s investment positively because of his experience in the grocery industry.
The company’s stock closed at $15.11 in trading on the Nasdaq stock market, up $1.04 from Friday’s close.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
