Kroger to acquire Giant Eagle in US$1.65B deal

USA – The Kroger Co. has agreed to acquire regional grocery and pharmacy retailer Giant Eagle in a transaction valued at US$1.65 billion, giving the supermarket operator access to nearly 200 additional stores as it seeks to expand its presence in parts of the US Midwest and Mid-Atlantic.

The agreement, announced on July 1, states that Kroger will pay US$1.25 billion in cash while also taking on about US$400 million in outstanding liabilities, with the company’s board of directors unanimously approving the acquisition.

Giant Eagle operates about 197 supermarkets and 11 standalone pharmacies across northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana, generating approximately US$9 billion in annual sales as one of the largest family-owned grocery retailers in its markets.

Expansion into regional markets

Kroger Chief Executive Officer Greg Foran said the company viewed Giant Eagle as a strong regional retailer with established operations in fresh food, pharmacy services, private label products and customer loyalty, adding that the acquisition would extend Kroger’s reach into neighbouring markets while supporting its grocery, meal solution and customer service operations.

The combined business plans to integrate Giant Eagle’s store network, loyalty programme, pharmacy operations, and private-label brands with Kroger’s ecommerce platform, data capabilities, and personalised shopping technologies to improve in-store and online services.

Kroger also said it intends to introduce its Zero Hunger | Zero Waste community programme into the areas currently served by Giant Eagle, building on the retailer’s existing community engagement initiatives.

Meanwhile, Giant Eagle Chief Executive Officer Bill Artman said joining Kroger would create opportunities to continue the company’s strategy while aiming to improve product quality, customer service, everyday prices and career prospects for employees.

Financial outlook and regulatory review

Kroger said it will fund the purchase entirely with cash and expects to keep its net total debt-to-adjusted EBITDA ratio within its target range of 2.3 to 2.5 times after the transaction is completed.

The retailer also said it intends to continue paying dividends, subject to board approval, to maintain its previously announced US$2 billion share repurchase programme, and to preserve financial capacity for future investments.

According to Kroger, the acquisition is expected to increase adjusted earnings per diluted share during the second full year after completion, excluding one-time transaction and integration expenses.

The companies said they anticipate selling a limited number of Giant Eagle stores to satisfy regulatory requirements, with the acquisition expected to close in 2027 after obtaining the necessary regulatory clearances and meeting customary closing conditions.

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.