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Strategies & Market Trends : Speculating in Takeover Targets
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From: richardred2/10/2006 12:32:52 AM
   of 6517
Wild Oats shares jump after Yucaipa raises stake
Mon Feb 6, 2006 11:26 AM ET

(Adds details from filings, updates stock activity)

CHICAGO, Feb 6 (Reuters) - Wild Oats Markets Inc. (OATS.O: Quote, Profile, Research) shares jumped as much as 9 percent on Monday after Yucaipa said it raised its stake in the organic and natural foods grocer.

Yucaipa, the private equity firm owned by billionaire grocery magnate Ronald Burkle, increased its stake in Wild Oats to 14.9 percent from 9.2 percent, according to a 13D filing with the U.S. Securities and Exchange Commission on Friday.

"According to management, Yucaipa indicated that this would remain a passive investment; however, the investment size and new 13D language potentially suggests otherwise," Bear Stearns analyst Robert Summers said in a note on Monday. He has an "outperform" rating and $15.00 price target on Wild Oats.

In the filing, Yucaipa said that it could engage in talks with other persons or entities "regarding potential strategic transactions" involving Wild Oats and other supermarket and retail companies, depending on various factors.

That wording differed from the 13D filed when Yucaipa disclosed its 9.2 percent stake in Wild Oats in March 2005. At that time, Yucaipa said only that it "may communicate with other shareholders, industry participants and other interested parties concerning the company."

Summers said that language in the latest filing "suggests a more hands-on approach and greater involvement. This represents a dramatic change and could foreshadow more aggressive efforts by Yucaipa to increase visibility on the earning power of the underlying business."

Yucaipa and its affiliates acquired more than 1.7 million Wild Oats shares from Dec. 16, 2005 through Feb. 3, 2006. Nearly 1.45 million of those shares were purchased from Feb. 1 through Feb. 3, the filing shows.

Wild Oats shares jumped as high as $15.35 on Monday morning, and were last up 95 cents, or 6.8 percent, at $15.02.
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