UK’s EG Group to acquire Kroger convenience store business for $2.15bn
Retail acquisition news : EG Group, a UK-based petrol forecourt convenience store retailer has made a $2.15 billion deal to foray into the United States by acquiring 762 convenience stores of American supermarket chain Kroger.
Since October 2017, Kroger had been looking out for strategic alternatives for its convenience store business, including a possible sale, as part of its Restock Kroger initiative.
Kroger intends to use the proceeds from the sale of its convenience stores to repurchase shares and to bring down its net total debt.
Under the terms of the deal, EG Group will set up its North American headquarters in Cincinnati, Ohio and operate the Kroger convenience stores under their established banner names – Turkey Hill, Loaf ‘N Jug, Tom Thumb, Kwik Shop and Quik Stop.
Commenting on the EG Group acquisition of Kroger convenience store business, Mike Schlotman – executive vice president and chief financial officer of Kroger, said: “One of the most important considerations in our decision-making process was to enable continued operations to ensure minimal disruption to our associates.
“We are very pleased the EG Group plans to establish their North American headquarters in Cincinnati.
“EG Group is a recognized international petrol forecourt convenience operator and they have a commercial model which clearly looks to enhance the consumer offer by working with leading retail brands customers know and trust.”
Kroger convenience stores are present across 18 US states and have a total workforce of 11,000 associates. The 762 convenience stores that are part of the sale include 66 franchise operations.
Mohsin Issa – Founder and co-CEO of EG Group, on the EG Group acquisition of Kroger convenience store business, said: “This is an exciting time for EG Group, the entry into the US market presents a fantastic opportunity to deliver a successful retail offer to consumers across the various states.
“We have had much success across Europe and we firmly believe the Kroger assets present a fantastic foundation to overlay our retail experience and know-how in the US.”
Kroger convenience store business had earned $4 billion of revenue in 2016. In the same year, the Kroger’s convenience store business sold 1.2 billion gallons of fuel.
Zuber Issa – Founder and co-CEO of EG Group, commenting further on EG Group acquisition of Kroger convenience store business, said: “Our business model is simple but effective – EG Group is creating a stronger relationship between consumers and leading retail brands they want to access.
“In the US we aim to create a retail environment which delivers convenience, provides value and serves as a retail destination offering excellent welfare to motorists who live and work near our petrol forecourt convenience retail stores.”
The transaction excludes Kroger’s supermarket fuel centers and its Turkey Hill Dairy.
EG Group and Kroger expect to close the transaction during the first quarter of the latter’s fiscal year.
EG Group acquisition of Kroger convenience store business is expected to be completed quickly as EG Group is yet to have any presence in the US so far. The transaction, which will be still subject to regulatory approval, is likely to be closed during the first quarter of Kroger’s fiscal year.