July 9 - Kroger beat out private equity players to nab Harris Teeter Supermarkets and expand in the southeast and mid-Atlantic regions. Fred Katayama reports.
Traditional grocer Kroger beat out some private equity players to nab Harris Teeter Supermarkets. The U.S.' largest supermarket operator is paying $2.5 billion dollars in cash and debt for the high-end chain, allowing it to expand in the southeast and mid-Atlantic regions. Together, they'll run more than 2,600 supermarkets in 34 states and Washington DC. But Kroger will let Harris Teeter run as a separate brand and as a subsidiary headquartered in North Carolina. Kroger is paying $49.38 a share. That's a two percent premium over Monday's closing price. But that's a 34 percent premium over Harris Teeter's price in mid-January when the media reported that the company was exploring its options. The stock has since run up 31 percent. Last week, BB&T Capital Markets analyst Andrew Wolf wrote that an acquisition of Harris Teeter "would be a good deal for Kroger since it would be meaningfully accretive to earnings per share while yielding a growth oriented high-end banner in Harris Teeter." Kroger says it expects the purchase to help beef up its profit in the first year after the merger. And it says that'll help it save up to $200 million over the next three to four years.