Kroger to acquire Giant Eagle for $1.65B
The transaction is expected to close in 2027, subject to receipt of required regulatory clearance and other customary closing conditions.
The Kroger Co. and Giant Eagle are announcing a definitive agreement under which Kroger will acquire Giant Eagle, a family-owned food and pharmacy retailer with approximately $9 billion in annual sales and 197 supermarkets and 11 standalone pharmacies across northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana. The transaction has been unanimously approved by Kroger's Board of Directors.
The transaction has a purchase price of $1.65 billion, comprised of $1.25 billion in cash consideration and the assumption of approximately $400 million in outstanding liabilities.
"Giant Eagle is a well-run, high-quality regional grocer with a strong reputation for fresh products, pharmacy, private label and customer loyalty," said Greg Foran, chief executive officer at Kroger. "We evaluated the opportunity carefully, and the strategic fit is clear. Giant Eagle expands our reach into attractive adjacent markets, allowing us to do what we do best: Run outstanding stores, deliver fresh foods and convenient meal solutions at affordable prices, and take care of our customers and associates every single day."
Kroger finds that Giant Eagle's established store base, loyalty program, pharmacy business and private-label portfolio provide a strong foundation for growth. Together with Kroger's eCommerce solutions, data and personalization capabilities and operating discipline, Kroger sees opportunity to accelerate growth both in-store and online, enhance the customer experience and create long-term value for shareholders.
The companies plan to build on Giant Eagle's long history of community engagement by bringing Kroger's Zero Hunger | Zero Waste impact plan to new communities.
"Today's announcement marks an exciting next chapter for our Team Members, customers, vendors and community partners," said Bill Artman, Chief Executive Officer at Giant Eagle. "Together with Kroger, we will be well-positioned to advance our strategy and deliver better quality and service, better everyday value, and a better shopping experience for our customers, while providing greater growth opportunities for our dedicated Team Members."
Kroger will finance the transaction with cash. Following the close of the transaction, the company expects to maintain its net total debt to adjusted EBITDA ratio target range of 2.3 – 2.5x. As part of Kroger's commitment to shareholder returns, the company expects to maintain its dividend, subject to board approval, continue its previously announced $2 billion share repurchase program and preserve financial flexibility to invest in its strategic priorities and core business.
Kroger expects the transaction to be accretive to adjusted EPS per diluted share in the second full year after close, excluding one-time transaction and integration costs.
In connection with obtaining the requisite regulatory clearance necessary to consummate the transaction, Kroger and Giant Eagle expect to make limited Giant Eagle store divestitures.
The transaction is expected to close in 2027, subject to receipt of required regulatory clearance and other customary closing conditions.
RBC Capital Markets is serving as exclusive financial advisor, and Jones Day is serving as legal counsel to Kroger.
Wells Fargo is serving as exclusive financial advisor to Giant Eagle. WilmerHale is serving as the primary legal advisor and Troutman Pepper Locke is serving as local counsel on Giant Eagle's behalf.
Source: The Kroger Co.
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