US grocery store chain Kroger to buy Harris Teeter for $2.5 bn
09 Jul 2013
US grocery store chain Kroger today said that it will buy Harris Teeter Supermarkets for $2.5 billion in cash, in a deal that enables it to add 212 stores in eight states.
Under the terms of the deal, which has been approved by the boards of both companies, Kroger will pay $49.38 per Harris Teeter share, representing a 2 per cent premium over the company's yesterday closing stock price, and 33.7 per cent premium to 18 January closing price, the day Harris Teeter announced that it was evaluating strategic alternative.
Kroger, which operates 2,419 stores in 31 states, will finance the deal through debt and will assume Harris Teeter's debt of about $100 million.
Harris Teeter's 212 stores are located primarily in high-growth markets, vacation destinations and university communities in Virginia, North Carolina, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia.
The North Carolina-based also operates distribution centers for grocery, frozen and perishable foods in Greensboro and Indian Trail and a dairy facility in High Point in North Carolina.
The grocery store chain had revenues of approximately $4.5 billion in 2012.
Kroger, the country's largest traditional supermarket operator, said that it expects the deal to bring in annual cost savings of $40 million to $50 million over the next three to four years.
Together the company will operate 2,631 supermarkets and employ over 368,300 people across 34 states and the District of Columbia.
Following closing, Harris Teeter will continue to operate its stores as a subsidiary of Kroger and will continue to be led by key members of Harris Teeter's senior management team.
Kroger said that it has no plans to close stores, and associates will continue to have employment opportunities with both companies.
We are excited to welcome Harris Teeter to the Kroger family," said David Dillon, Kroger's chairman and CEO. "Harris Teeter is an exceptional company with a great brand, friendly and talented associates, and attractive store formats in vibrant markets run by a first-class management team. They share our customer-centric approach to everything we do – from store format and merchandising to innovative loyalty programs. This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates."
Thomas Dickson, chairman and CEO of Harris Teeter said, "We are excited about becoming part of The Kroger Co., one of the best food retailers in the US while maintaining the Harris Teeter banner, our management teams, our new store growth plan, our distribution and manufacturing facilities in North Carolina as well as our headquarters in Matthews."
In addition to its flagship brand, Kroger operates under two dozen local banner names including City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry's, King Soopers, QFC, Ralphs and Smith's.
The company also operates 784 convenience stores, 322 fine jewelry stores, 1,182 supermarket fuel centers and 37 food processing plants.
