Whole Foods Market, which sells national and organic groceries, confirmed plans to sell the 35 Henry's and Sun Harvest stores plus a distribution center it would gain if its deal to acquire rival Wild Oats Markets is completed.
Whole Foods would sell the stores to a unit of Smart & Final, a Los Angeles-based food retailer. Smart & Final is privately held and controlled by New York private equity firm Apollo Management.
The sale is subject to Whole Foods closing on its proposed acquisition of smaller rival Wild Oats. The U.S. Federal Trade commission is seeking to block the $565 million deal, claiming it would reduce competition and increase prices for consumers.
In a court filing in the FTC's lawsuit made public Wednesday, Apollo said it had agreed to buy "certain Wild Oats stores" if the deal goes through.
Henry's and Sun Harvest stores are in California and Texas.