Update : Whole Foods Market Inc.

Whole Foods Market Inc., the largest U.S. natural-foods grocer, agreed to sell 35 of Wild Oats Markets Inc.'s stores to Apollo Management LP.

The sale of the Henry's Farmers Market and Sun Harvest stores will only occur if Whole Foods' proposed acquisition of Wild Oats, which U.S. regulators are trying to block, goes through. Whole Foods, based in Austin, Texas, didn't disclose the terms of the Apollo transaction in a statement today.

The Sun Harvest and Henry's stores, located in California and Texas, don't fit into Whole Foods' long-term strategy, the company said. It agreed in February to buy Wild Oats for $565 million.

The stores, as well as a California distribution center, will become part of Apollo's Smart & Final Inc. grocery unit, which the firm bought last month for $812.9 million.

Apollo, which has also invested in Ralphs Grocery Co. and Dominick's Supermarkets Inc., considered acquiring all of Wild Oats, according to papers filed in the U.S. Federal Trade Commission's suit to block the Whole Foods transaction.

Apollo made the disclosure in a motion in a federal court in Washington to keep Whole Foods from gaining access to information subpoenaed by the FTC.

Shares of Boulder, Colorado-based Wild Oats fell 28 cents to $16.75 at 6:25 p.m. in Nasdaq Stock Market composite trading today. Shares of Whole Foods rose 9 cents to $39.04.

source:www.bloomberg.com