Kroger Enters Definitive Agreement with EG Group to Sell C-Stores for $2.15 Billion
CINCINNATI, OH and BLACKBURN, U.K. – After months of speculation about the retailer’s C-store business, the Kroger Co. has finally announced a definitive agreement. The U.S.-based grocer has agreed to sell the entirety of its convenience store business unit to EG Group—a U.K.-based, privately-held gas station and convenience store retailer—in a transaction valued at $2.15 billion.
"Our convenience store business has been a part of our company for many years. We want to thank our management team and associates for their enduring commitment to our customers, and for the contributions they have made to build our supermarket fuel business," said Mike Schlotman, Kroger's EVP and CFO, in a press release. "As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business."
In October of 2017, Kroger announced its intent to explore “strategic alternatives” for the company’s C-store business—alternatives that included the potential of an all-out sale in conjunction with the retailer’s Restock Kroger plan.
As part of the agreement, the two companies noted in a press release, EG Group will establish a North American headquarters in Cincinnati, OH.
"This is an exciting time for EG Group, the entry into the U.S. market presents a fantastic opportunity to deliver a successful retail offer to consumers across the various states,” said Mohsin Issa, EG Group Founder and Co-CEO. “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 U.S. We are committed to investing in the Kroger network, partnering with leading retail brands, and working with the exceptional management team and associates transferring across to deliver a comprehensive retail offer."
EG Group will continue to operate formerly Kroger-owned stores under their established banner names—including Turkey Hill, Loaf 'N Jug, Kwik Shop, Tom Thumb, and Quik Stop.
"One of the most important considerations in our decision-making process was continued operations to ensure minimal disruption to our associates," continued Schlotman. "We are very pleased the EG Group plans to establish their North American headquarters in Cincinnati. EG Group is also 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…We now look forward to working with them closely to ensure a smooth transition for associates."
Kroger will reportedly use the net proceeds from its sale to repurchase shares and to lower its net total debt to adjusted EBITDA ratio. Kroger's supermarket fuel centers and its Turkey Hill Dairy were not included in the transaction.
How will the entry of EG Group into the U.S. and a newly-streamlined Kroger affect the North American grocery market? AndNowUKnow will continue to report.