July 1 (Reuters) – Kroger said on Wednesday it would buy supermarket chain Giant Eagle in a $1.65 billion deal, as it looks to scale amid intense competition in the grocery sector.
The deal follows Kroger’s failed $25 billion merger plan with grocer Albertsons in 2024, after courts blocked the deal.
Dealmaking in the consumer industry, including food, beverage, personal care, pet products and health, has been robust. Companies are consolidating to weather inflationary pressures, shifting consumer preferences and competition.
Kroger is fighting intense competition from rivals including Walmart and online retailers such as Amazon . It has been trying to bring down grocery prices to appease consumers battling cost-of-living pressures.
“We evaluated the opportunity carefully, and the strategic fit is clear. Giant Eagle expands our reach into attractive adjacent markets,” Kroger CEO Greg Foran said.
The transaction involves $1.25 billion in cash consideration and the assumption of approximately $400 million in Giant Eagle’s outstanding liabilities, Kroger said.
Shares of Cincinnati, Ohio-based Kroger were down about 2% in premarket trading.
Giant Eagle operates around 197 supermarkets and 11 standalone pharmacies across northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana.
In comparison, Kroger operates about 2,700 supermarkets and multi-department stores and around 2,200 pharmacies across 35 states in the U.S.
The retailer expects the transaction to be accretive to adjusted profit in the second full year following the deal’s close in 2027.
Kroger reaffirmed its annual forecasts in June as it warned about inflationary pressure in the back half of the year.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Shreya Biswas)
Comments