Mrs. Gooch Markets Agrees to Be Acquired by Texas Chain

Mrs. Gooch’s Natural Food Markets, based in Sherman Oaks, said Wednesday that it agreed to be acquired by Whole Foods Market Inc. in a $56-million stock deal that merges the nation’s two biggest natural-food supermarket chains.

Whole Foods, based in Austin, Tex., has 22 stores in Texas and five other states. In fiscal 1992, it reportedly earned $3.1 million on sales of about $120 million. Privately owned Mrs. Gooch’s, with seven stores in the Los Angeles area, which caters to upscale, health-conscious shoppers, had about $85 million of sales last year.

“We consider Mrs. Gooch’s to be one of the premier natural foods supermarkets in the U. S.,” said John Mackey, Whole Foods’ chairman and chief executive. “We think we can expand to about 20 Mrs. Gooch’s stores in Southern California over the next six or seven years.”

In the deal, Mrs. Gooch’s shareholders will receive about 1.5 million shares of newly issued Whole Foods stock. The transaction is subject to approval of Whole Foods shareholders at a meeting likely to be held in July. Whole Foods’ stock climbed 1.25 on the announcement to close at $37.25 a share.

Mrs. Gooch’s would become a wholly owned subsidiary of Whole Foods, but would continue to operate under the name of the chain’s co-founder, Sandy Gooch. John Moorman, Mrs. Gooch’s president, would continue running the stores as head of Whole Foods’ new Southern California operations. He would also join the board of Whole Foods Markets.

Gooch and co-founder Dan Volland opened their first store in West Los Angeles in 1977. Gooch declined to comment on the reasons behind the sale. In a statement, Gooch said she would remain at the company through the transition, then pursue other interests. Co-founder Dan Volland, who will also leave Mrs. Gooch’s to pursue other interests, also declined to comment. Natural foods account for only about 2% of $200 billion of annual retail food sales in the United States. But that percentage is expected to grow to 9% over the next 10 to 20 years, said Lloyd Greif, a Los Angeles investment banker who said his firm initiated Mrs. Gooch’s sale.

Mrs. Gooch’s is the third natural-foods chain Whole Foods has acquired in less than two years. Whole Foods, started by Mackey and two partners in 1980, went public in January, 1992 at $17 a share.