Kroger Agrees to Buy Harris Teeter for 2.5 Billion
The largest US grocery chain, Kroger Co., agreed to buy Harris Teeter Supermarkets Inc. for around US$2.5 billion to strengthen its presence in the southeastern part of the United States.
Harris Teeter Supermarkets Inc. had revenues of around US$4.5 billion in 2012 and has 212 stores in states that include South Carolina, North Carolina, and Virginia. Kroger said the buyout should bring annual savings to the company of about US$40 million to US$60 million in the few years. Kroger are to finance the deal with debt. Bank of America Corp. is said to have designed the loan to fund the transaction for Kroger.
Kroger's offer of $49.38 per share in the deal and is around 30% more than Harris Teeter Supermarkets Inc .'s closing price on the18th of January, the day of the first media report that the chain was in talks with Kroger for a possible acquisition, according to a statement today.
"It strengthens Kroger's position in the southeast, especially the quarter from Charlotte through Baltimore. Harris Teeter has a very strong quality and service profile. They have great value, but you don't go there to buy cheap seafood, you go there to buy great seafood," Charles Cerankosky, an analyst at Northcoast Research, said in an interview with media.