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Kroger grocery chain to acquire Harris Teeter

09 July 2013

Staff, Charlotte Business Journal

The Kroger Co. (NYSE:KR) has agreed to acquire Harris Teeter Supermarkets Inc. (NYSE:HTSI) in a cash deal valued at $2.44 billion, purchasing all of the Matthews-based grocery chain’s stock for $49.38 per share.

Under the deal, Harris Teeter stores would continue to operate under that banner, and the operation would remain based in Matthews. There are no plans to close any stores, the companies say.

Cincinnati-based Kroger is paying a premium of 33.7 percent over Harris Teeter’s closing share price on Jan. 18, the day it was first reported that Harris Teeter was considering a possible sale of the company.

Harris Teeter’s stock price has been rising significantly in recent weeks, driven by speculation that the company would be sold. Harris Teeter shares closed Monday at $48.52.

As part of the deal, Kroger also would assume Harris Teeter’s outstanding debt of about $100 million. Harris Teeter would operate as subsidiary of Kroger.

“We are excited to welcome Harris Teeter to the Kroger family,” David Dillon, Kroger chairman and CEO, said in a joint statement by the companies Tuesday morning. “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,” Dillon added. “We look forward to bringing together the best of Kroger and Harris Teeter while continuing to operate and grow the Harris Teeter brands. Together, we can continue to deepen our connections with customers across all of our markets.”

Harris Teeter Chairman and CEO Thomas Dickson said, “Harris Teeter has a long track record of creating shareholder value and this merger is the culmination of those efforts over many years. We are excited about becoming part of The Kroger Co., one of the best food retailers in the U.S. 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.”

Dickson added: “As part of Kroger, Harris Teeter will be well equipped to continue to provide our customers outstanding quality and customer service as well as excellent value in an increasingly competitive market.”

Kroger is far larger than Harris Teeter, operating 2,419 supermarkets and multi-department stores in 31 states under banners that include Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry’s, King Soopers, QFC, Ralphs and Smith’s.

Kroger generated $96.8 billion in revenue in 2012.

Harris Teeter operates more than 200 stores in eight states, including the Carolinas, and Washington, D.C. It is the 23rd-largest supermarket chain in the United States. It had sales of $4.54 billion in 2012.

 

 



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