Court split on plea to stop takeover

An appeals court panel of three judges appeared split Wednesday on federal regulators’ persistent effort to halt Whole Foods Market Inc.‘s takeover of a rival.

The Federal Trade Commission tried to block Whole Foods’ acquisition of Boulder, Colo.-based Wild Oats last year, arguing that it would stifle competition and harm consumers. But a federal district court judge rejected the agency’s request in August and the two stores closed the deal later that month.

The FTC’s appeal of that ruling is unusual because antitrust regulators usually throw in the towel after the courts clear a transaction, since acquisitions can be difficult to unwind.

Judge David Tatel of the U.S. Court of Appeals for the D.C. Circuit expressed some sympathy for the FTC’s arguments that the district court had applied an incorrect legal standard when it green-lighted the deal, and failed to consider all the evidence presented by the agency.

“An activist shareholder on Wednesday urged Circuit City Stores Inc. to allow Blockbuster Inc. to examine its finances and start good-faith negotiations on the movie-rental chain’s bid for the struggling electronics retailer.

Wattles Capital Management, which owns about 6.5 percent of Circuit City’s stock, said in a letter to Circuit City that the company should provide access to Blockbuster and discuss its buyout proposal along with other possible bids.

Blockbuster went public last week with a takeover bid of just over $1 billion for Circuit City with dreams of creating a huge chain that would sell electronic gadgets and rent movies and games.

Based on Circuit City’s 168.4 million shares outstanding at the end of last year, the February offer of $6 to $8 per share valued Circuit City at $1.01 billion to $1.35 billion.

“Volkswagen AG said Wednesday it has narrowed its list of states competing for a potential U.S. production facility to Alabama, Michigan and Tennessee.

The German automaker said it was still evaluating whether to build a new plant in the United States and would make a final decision this summer.

“We reviewed many excellent sites and the process to narrow down the locations was not an easy one. We look forward to continuing to work with the states of Alabama, Michigan and Tennessee as the evaluation moves forward,” said Stefan Jacoby, Volkswagen Group of America’s president and chief executive.

Volkswagen officials have said the surging euro has pushed plans for a new production facility forward.