Merger and Acquisition Scenario

Summary

Other Scenarios:

KR - WFMI
KR - NUTR
WFMI - OATS
NUTR - OATS

Buyer:	The Kroger Co. (KR)	Last Price:	26.58	Market Cap.:	18.85B
Target:	Wild Oats Markets, Inc. (OATS)	Last Price:	18.52	Market Cap.:	554.23M

Lines of Business Summary:

The Kroger Co. (KR) competes in 1 industry and 6 product/service groups
Wild Oats Markets, Inc. (OATS) competes in 1 industry and 5 product/service groups
A combined entity will have 25% Product/Service Group overlap
The Kroger Co. (KR) has 4 and Wild Oats Markets, Inc. (OATS) has 0 suppliers that rely on a material % of their business. They share 0 in common.

Product Summary:

Overlap & Complementary Sectors

Sector	Buyer	Target	# of Focused Companies
Retail and Wholesale			285
Apparel and Accessories			62
Accessories			7
Jewelry Stores			7
Food and Beverage			30
Grocery Stores			18
Convenience Stores			0
Supermarkets			18

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Sample Products in Similar Lines of Business	Sample Products in Complementary Lines of Business
Buyer (Total: 27) Food 4 Less Kroger Marketplace Fred Meyer Gerbes	Target (Total: 4) Wild Oats Natural Marketplace Sun Harvest Farms Henry's Farmers Market Capers Community Market	Buyer Fox Jewelers Littman Jewelers Barclay Jewelers Fred Meyer Jewelers	Target n/a

Sample Products in Similar Lines of Business

Sample Products in Complementary Lines of Business

Buyer (Total: 27)

Food 4 Less
Kroger Marketplace
Fred Meyer
Gerbes

Target (Total: 4)

Wild Oats Natural Marketplace
Sun Harvest Farms
Henry's Farmers Market
Capers Community Market

Buyer

Fox Jewelers
Littman Jewelers
Barclay Jewelers
Fred Meyer Jewelers

Target

n/a

Business Relationship Summary:

Top Key Suppliers	Top Key Customers
Buyer (Total: 50) Coinstar, Inc. (CSTR) Bob Evans Farms, Inc. (BOBE) AmREIT (AMY) Galaxy Nutritional Foods, Inc. (GXYF)	Target (Total: 4) The Macerich Company (MAC) United Natural Foods,Inc. (UNFI) Green Mountain Coffee Roasters Inc. (GMCR) Nutraceutical Int'l Corp. (NUTR)	Buyer (Total: 2) Jackson Hewitt Tax Service Inc. (JTX) Source Interlink Companies, Inc. (SORC)	Target (Total: 1) Pathmark Stores, Inc. (PTMK)

Top Key Suppliers

Top Key Customers

Buyer (Total: 50)

Coinstar, Inc. (CSTR)
Bob Evans Farms, Inc. (BOBE)
AmREIT (AMY)
Galaxy Nutritional Foods, Inc. (GXYF)

Target (Total: 4)

The Macerich Company (MAC)
United Natural Foods,Inc. (UNFI)
Green Mountain Coffee Roasters Inc. (GMCR)
Nutraceutical Int'l Corp. (NUTR)

Buyer (Total: 2)

Jackson Hewitt Tax Service Inc. (JTX)
Source Interlink Companies, Inc. (SORC)

Target (Total: 1)

Pathmark Stores, Inc. (PTMK)

Key Financial Summary:

Key Metrics

	Buyer	Target
Number of Employees	310,000	4,872
Revenue Per Employee	217,885.7	256,784.8
Total Revenue	20,726.0	311.8
Total Expenses	20,036.0	309.9
Other Revenue	0.0	0.0
Cost of Revenue	15,834.0	212.5
SG&A Expense	3,798.0	89.8
Research & Development	0.0	0.0
Other Operating Expense	0.0	0.3
Operating Income	690.0	1.9
Unusual Income	0.0	0.4
LT Debt to Capital	49.6	56.7
Fwd P/E	15.47	29.90
Fwd P/Rev	0.26	0.45
Book Value	5,260.0	112.7
Curr Portion of LTD/Cap Lease	1,414.0	0.4

Individual Company Summary

Focused

Buyer

Focused (): Retail and Wholesale > Food and Beverage > Grocery Stores > Supermarkets > Domestic

Target

Focused (): Retail and Wholesale > Food and Beverage > Grocery Stores > Supermarkets > Domestic

The Kroger Co. operates retail food and drug stores, multi-department stores, jewelry stores and convenience stores throughout the United States. The Company also manufactures and processes some of the food for sale in its supermarkets. As of February 3, 2007, the Company operated, either directly or through its subsidiaries, 2,468 supermarkets and multi-department stores under two dozen banners, including Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith?s, Fry?s, Fry?s Marketplace, Dillons, QFC and City Market. Of these stores, 631 had fuel centers. As of February 3, 2007, The Kroger Co., either directly or through subsidiaries, operated 779 convenience stores and 412 fine jewelry stores. The Company?s supermarkets are generally operated under formats, which include combination food and drug stores (combo stores), multi-department stores, price impact warehouses or marketplace stores.

Target

Wild Oats Markets, Inc. (Wild Oats) is a natural foods supermarket chain in North America. As of February 26, 2007, the Company operated 110 natural foods stores in 24 states and British Columbia, Canada under several names, including Wild Oats Marketplace (nationwide), Henry?s Farmers Market (southern California), Sun Harvest (Texas) and Capers Community Market (British Columbia, Canada). Wild Oats provides a selection of natural, organic and gourmet foods, environmentally friendly household products and natural vitamins, supplements, herbal and homeopathic remedies, and body care products. Its selection of natural and organic products include dry grocery, produce, meat, poultry, seafood, dairy, frozen, prepared foods, bakery, vitamins and supplements, health and body care, and household items. On August 28, 2007, Whole Foods Market, Inc. acquired 84.1% interest in Wild Oats.

Deal Summary

Key Ratios

	Buyer	Target
Gross Margin %	23.93	30.8
Operating Margin %	3.38	-1.38
Quick Ratio	0.11	0.3
Current Ratio	0.81	0.88
Coverage Ratio	-0.21	0.3
Total Assets	20,996.0	438.0
Return on Equity %	21.81	-20.05
Return on Assets %	5.46	-5.16
Cash+ ST Inv. Per Share	0.26	1.25
Total Debt	6,591.0	169.5
Total Debt to Equity %	125.3	150.49
Total Debt to Tangible Equity %	209.9	2,359.9
Debt to Asset %	31.39	38.71

Product Summary

Sector

Buyer

Target

Retail and Wholesale

Apparel and Accessories

Accessories

Jewelry, luggage, and other leather goods stores.

Food and Beverage

Grocery Stores

Grocery stores such as convenience stores and supermarkets.

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Product Details

Sector

Buyer

Target

Retail and Wholesale

Apparel and Accessories

Accessories

Jewelry Stores

Jewelry stores that sell diamonds, necklaces, bracelets, watches, and other luxury personal items.

Buyer Products:

Fox Jewelers
Littman Jewelers
Barclay Jewelers
Fred Meyer Jewelers

Food and Beverage

Grocery Stores

Convenience Stores

Convenience stores that sell a limited number of food and snack items.

Buyer Products:

The Kroger Co.

Supermarkets

Domestic

Midwest

Supermarkets operating in the Midwest region of the United States (Comprised of IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, and WI).

Buyer Products:

Food 4 Less
Kroger Marketplace
Fred Meyer
Gerbes
Baker's
Pay Less
Kessel Food Markets
Jay C
Owen's
Hilander
Dillons
Kroger

Target Products:

Wild Oats Natural Marketplace

Northeast

Supermarkets operating in the Northeast region of the United States (Comprised of CT, DC, DE, MA, MD, ME, NH, NJ, NY, PA, RI, and VT).

Buyer Products:

Kroger

Target Products:

Wild Oats Natural Marketplace

South

Supermarkets operating in the southern region of the United States (Comprised of AL, AR, FL, GA, KY, LA, MS, NC, OK, SC, TN, TX, VA, and WV).

Buyer Products:

Kroger

Target Products:

Wild Oats Natural Marketplace
Sun Harvest Farms

West

Supermarkets operating in the western region of the United States (Comprised of AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, and WY).

Buyer Products:

QFC
Fred Meyer
Ralphs
Cala Foods/Bell Markets
Fry's
Smith's Marketplace
City Market
Food 4 Less
Foods Co
Fry's Marketplace
Smith's
King Soopers

Target Products:

Wild Oats Natural Marketplace
Henry's Farmers Market

International

Americas

Canada

Supermarkets operating in Canada.

Target Products:

Capers Community Market

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Relationship Details

Key Competitors

	Name	Percent	Market Cap.	P/E Ratio (TTM)	Fwd P/E	P/R Ratio (TTM)	Fwd P/Rev	Price To Tang. Book Value
Overlap
	Whole Foods Market, Inc.	n/a	6,151.556	32.62	32.70	1.00	0.95	4.86
Buyer
	Wal-Mart Stores, Inc.	n/a	179,265.995	14.32	14.84	0.49	0.47	3.75
	CVS Caremark Corporation	n/a	56,007.864	30.77	19.60	0.98	0.72	n/a
	Target Corporation	n/a	55,895.454	18.87	17.68	0.90	0.84	3.50
	Walgreen Company	n/a	44,783.731	21.77	21.25	0.85	0.82	4.11
	Costco Wholesale Corporation	n/a	27,042.746	25.37	23.93	0.42	0.41	3.19
	Koninklijke Ahold N.V. (ADR)	n/a	16,714.199	13.66	18.96	0.28	0.43	1.78
	Safeway Inc.	n/a	13,954.854	15.96	15.57	0.34	0.33	3.65
	Delhaize Group (ADR)	n/a	9,677.261	20.11	14.93	0.37	0.37	16.76
	SUPERVALU INC.	n/a	8,971.523	17.49	15.02	0.20	0.20	n/a
	Whole Foods Market, Inc.	n/a	6,151.556	32.62	32.70	1.00	0.95	4.86
	The Great Atlantic & Pacific Tea Company	n/a	1,314.550	n/a	-18.58	0.19	0.19	2.35
	Winn-Dixie Stores, Inc.	n/a	1,128.158	4.22	120.44	0.16	0.16	2.72
	Ingles Markets, Incorporated	n/a	738.034	13.19	n/a	0.26	n/a	2.19
	Coffee Holding Co., Inc.	n/a	29.032	26.18	n/a	0.56	n/a	2.42
Target
	Whole Foods Market, Inc.	n/a	6,151.556	32.62	32.70	1.00	0.95	4.86
	Nutraceutical Int'l Corp.	n/a	167.607	12.46	n/a	1.10	n/a	3.28
	AMCON Distributing Co.	n/a	15.285	8.52	n/a	0.02	n/a	n/a

- Defined by the Company - Defined by Others

Dependent Suppliers

	Name	Percent	Market Cap.	P/E Ratio (TTM)	Fwd P/E	P/R Ratio (TTM)	Fwd P/Rev	Price To Tang. Book Value
Overlap
	United Natural Foods,Inc.	n/a	1,149.161	23.12	21.86	0.43	0.42	3.52
	Green Mountain Coffee Roasters Inc.	n/a	794.539	73.53	63.89	2.52	2.40	n/a
Buyer
	Coinstar, Inc.	11.40%	911.932	56.18	52.35	1.66	1.61	11.54
	Bob Evans Farms, Inc.	10.00%	1,150.130	18.92	18.94	0.69	0.65	2.02
	AmREIT	9.20%	183.664	25.08	10.16	3.20	5.54	1.22
	Galaxy Nutritional Foods, Inc.	5.60%	7.700	52.96	n/a	0.28	n/a	n/a
	GlaxoSmithKline plc (ADR)	n/a	147,455.705	13.50	12.84	3.20	3.16	11.88
	Covidien Ltd.	n/a	19,802.509	n/a	14.74	1.97	1.95	n/a
	Developers Diversified Realty Corp.	n/a	6,642.157	25.81	13.53	7.33	6.36	2.00
	Owens-Illinois, Inc.	n/a	6,259.383	71.86	18.26	0.83	0.80	n/a
	Regency Centers Corporation	n/a	4,828.677	24.48	16.20	11.22	10.43	2.59
	Federal Realty Inv. Trust	n/a	4,741.044	52.89	22.43	9.91	10.25	5.48
	Hansen Natural Corporation	n/a	4,094.060	38.20	29.34	5.53	4.63	14.76
	Crown Holdings, Inc.	n/a	3,945.955	11.08	16.74	0.54	0.51	n/a
	Weingarten Realty Investors	n/a	3,476.171	12.79	13.20	5.90	5.90	2.53
	WebMD Health Corp.	n/a	3,114.836	248.37	94.47	10.43	8.73	12.30
	Jarden Corporation	n/a	2,358.868	22.44	13.52	0.60	0.50	n/a
	Perrigo Company	n/a	1,940.292	26.29	18.81	1.34	1.22	4.83
	Equity One, Inc.	n/a	1,931.228	25.41	18.51	7.76	7.37	2.11
	Flowers Foods, Inc.	n/a	1,886.177	21.17	21.20	0.96	0.94	3.65
	Chattem Inc.	n/a	1,181.098	24.25	20.63	3.37	2.77	n/a
Target
	The Macerich Company	n/a	5,837.385	27.68	17.31	6.76	6.77	3.97
	United Natural Foods,Inc.	n/a	1,149.161	23.12	21.86	0.43	0.42	3.52
	Green Mountain Coffee Roasters Inc.	n/a	794.539	73.53	63.89	2.52	2.40	n/a
	Nutraceutical Int'l Corp.	n/a	167.607	12.46	n/a	1.10	n/a	3.28

- Defined by the Company - Defined by Others

Key Customers

	Name	Percent	Market Cap.	P/E Ratio (TTM)	Fwd P/E	P/R Ratio (TTM)	Fwd P/Rev	Price To Tang. Book Value
Buyer
	Jackson Hewitt Tax Service Inc.	n/a	867.738	13.27	13.30	2.96	2.78	n/a
	Source Interlink Companies, Inc.	n/a	217.613	n/a	6.10	0.12	0.11	n/a
Target
	Pathmark Stores, Inc.	n/a	672.634	n/a	-70.22	0.17	0.16	n/a

- Defined by the Company - Defined by Others

Key Partners

	Name	Percent	Market Cap.	P/E Ratio (TTM)	Fwd P/E	P/R Ratio (TTM)	Fwd P/Rev	Price To Tang. Book Value
Buyer
	Adams Respiratory Therapeutics, Inc.	n/a	1,373.525	44.99	22.80	4.14	3.18	n/a
	Chattem Inc.	n/a	1,181.098	24.25	20.63	3.37	2.77	n/a
	Coinstar, Inc.	n/a	911.932	56.18	52.35	1.66	1.61	11.54
	Jackson Hewitt Tax Service Inc.	n/a	867.738	13.27	13.30	2.96	2.78	n/a
	Reddy Ice Holdings, Inc	n/a	630.946	59.52	38.93	1.85	1.73	n/a
	Peet's Coffee & Tea, Inc.	n/a	347.682	50.58	38.68	1.52	1.39	2.54
	Lifetime Brands, Inc.	n/a	271.447	21.15	13.26	0.55	0.50	2.90
	Source Interlink Companies, Inc.	n/a	217.613	n/a	6.10	0.12	0.11	n/a
	The Quigley Corporation	n/a	55.305	n/a	n/a	1.39	n/a	2.75
	Natrol, Inc.	n/a	49.674	70.77	n/a	0.74	n/a	1.65
	DSG International Limited	n/a	39.921	5.22	n/a	0.19	n/a	n/a
	Ascendia Brands, Inc.	n/a	29.037	n/a	n/a	0.25	n/a	n/a
	CoActive Marketing Group	n/a	18.643	n/a	n/a	0.21	n/a	7.98
Target
	Koninklijke Ahold N.V. (ADR)	n/a	16,714.199	13.66	18.96	0.28	0.43	1.78
	United Natural Foods,Inc.	n/a	1,149.161	23.12	21.86	0.43	0.42	3.52
	Pathmark Stores, Inc.	n/a	672.634	n/a	-70.22	0.17	0.16	n/a
	Gaiam, Inc.	n/a	510.342	69.67	67.10	2.17	2.07	4.17
	Nutraceutical Int'l Corp.	n/a	167.607	12.46	n/a	1.10	n/a	3.28
	The Golub Corporation	n/a	n/a	n/a	n/a	n/a	n/a	n/a

- Defined by the Company - Defined by Others

Financials

	Buyer	Target	Combined Entity
Income Statement
Operating Items
Revenue	67,422.0	1,209.8	68,631.8
Other Revenue	0.0	0.0	0.0
Total Revenue	67,422.0	1,209.8	68,631.8
Cost of Revenue	51,291.0	837.2	52,128.2
SG&A Expense	12,561.0	346.4	12,907.4
Depreciation & Amortization	1,288.0	13.7	1,301.7
Interest Expense	0.0	0.0	0.0
Other Operating Expense	0.0	1.2	1.2
Unusual Expense (Income)	0.0	28.0	28.0
Total Expenses	65,140.0	1,226.5	66,366.5
Operating Income	2,282.0	-16.7	2,265.3
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng	-479.0	-5.0	-484.0
Other, Net	0.0	0.0	0.0
Income Before Taxes	1,803.0	-21.7	1,781.3
Income Taxes	656.0	0.9	656.9
Income After Taxes	1,147.0	-22.6	1,124.4
Net Income - Excl. Xord. Items	1,147.0	-22.6	1,124.4
Net Income - Incl. Xord. Items	1,147.0	-22.6	1,124.4
Income Avail. to Common	1,147.0	-22.6	1,124.4
Share Items
Basic Avg. Shares Outstanding	706.0	30.1	736.1
Basic EPS - Excl. Xord. Items	1.62	n/a	1.53
Basic EPS - Incl. Xord. Items	1.62	n/a	1.53
Full Dilution Adjustment	0.0	0.0	0.0
Fully Diluted Shares Outstanding	715.0	30.4	745.4
F.D. EPS - Excl. Xord. Items	1.60	n/a	1.51
F.D. EPS - Incl. Xord. Items	1.60	n/a	1.51
Dividends Per Common Share	0.34	0.00	0.34
Balance Sheet
Assets
Cash and Equivalents	150.0	30.8	180.8
ST Investments	38.0	7.2	45.2
Accounts Receivable	719.0	3.3	722.3
Inventory	4,696.0	73.1	4,769.1
Prepayments and Advances	273.0	9.0	282.0
Other Current Assets	571.0	0.0	571.0
Current Assets	6,447.0	123.5	6,570.5
PPE	0.0	367.9	367.9
Accum D&A	0.0	-168.3	-168.3
PPE, Net	11,907.0	199.5	12,106.5
Goodwill & Intangibles	2,120.0	105.5	2,225.5
Other Assets	0.0	0.0	0.0
Other LT Assets	522.0	5.1	527.1
Total Assets	20,996.0	438.0	21,434.0
Liabilities
Accounts Payable	3,864.0	59.8	3,923.8
Payable/Accrued	0.0	0.0	0.0
Accrued Expenses	718.0	58.4	776.4
ST Debt	0.0	21.6	21.6
Curr Port of LTD & Cap Lease Oblg	1,414.0	0.4	1,414.4
Other (Current) Liabilities	2,006.0	0.0	2,006.0
Current Liab.	8,002.0	140.3	8,142.3
LT Debt	5,177.0	147.5	5,324.5
Total LT Debt	5,177.0	147.5	5,324.5
Deferred Taxes	295.0	0.0	295.0
Other LT Liab.	2,262.0	37.5	2,299.5
Total Liabilities	15,736.0	325.3	16,061.3
Shareholders Equity
Common Stock	943.0	0.0	943.0
Additional Paid in Capital	2,910.0	243.7	3,153.7
Retained Earnings	5,789.0	-96.2	5,692.8
Treasure Stock	-4,135.0	-37.2	-4,172.2
Other Equity	-247.0	2.3	-244.7
Total Equity	5,260.0	112.7	5,372.7
Total Liab. & Equity	20,996.0	438.0	21,434.0
Shares Outstanding	708.0	29.9	737.9
Cash Flow
Operating Cash Flow
CF Net Income	1,146.0	-22.6	1,123.4
CF Depreciation	1,288.0	26.7	1,314.7
CF Deferred Taxes	-53.0	-0.1	-53.1
Other Non-Cash Items	240.0	32.0	272.0
Change in Working Capital	-145.0	-14.4	-159.4
Total Cash From Operating Activities	2,476.0	21.6	2,497.6
Investing Cash Flow (not calculated)
Capital Expenditures	-1,871.0	-52.4	-1,923.4
Other Investing Cash Flows	53.0	21.0	74.0
Total Cash From Investing Activities	-1,818.0	-31.4	-1,849.4
Financing Cash Flow (not calculated)
Dividends Paid	-186.0	0.0	-186.0
Purchase Or Sale of Stock	-361.0	4.8	-356.2
Purchase and Retirement of Debt	-582.0	-0.6	-582.6
Other Financing Cash Flow	0.0	-3.6	-3.6
Total Cash From Financing Activities	-1,129.0	0.6	-1,128.4
Exchange Rate Effects	0.0	0.5	0.5
Net Change in Cash	-471.0	-8.8	-479.8
Cash Taxes Paid	611.0	0.2	611.2
Cash Interest Paid	475.0	6.7	481.7