The country’s largest traditional supermarket operator will soon be growing even bigger.
Kroger announced Tuesday that it has agreed to buy Harris Teeter Supermarkets Inc. for about $2.44 billion in cash. The deal expands Cincinnati-based Kroger’s store base in the Southeast and increases the number of states it operates in by three to 34.
Harris Teeter currently has 14 locations across South Carolina, mostly limited to Charleston and the Charlotte suburbs. It has 212 stores overall. In comparison, Kroger operates 2,419 stores in 31 states. In addition to its flagship brand of supermarkets, it also owns Ralphs, Fry’s and Food 4 Less.
Matthews, N.C.-based Harris Teeter will still operate as a subsidiary of Kroger and company officials say they do not anticipate closing any stores under the merger. In a conference call Tuesday, Kroger Chief Financial Officer Michael Schlotman said current senior management will remain in place at the acquired stores.
The deal has been approved by both companies’ boards, although Harris Teeter shareholders still need to give their okay. Schlotman said the Federal Trade Commission must also give its regulatory approval about store locations in the same market.
Harris Teeter announced in February that it was exploring strategic alternatives, including a possible sale.
Under the terms of the agreement, Kroger will pay $49.38 for each of the fellow supermarket chain’s shares. The price represents a 2 percent increase over the company’s Monday closing stock price.
Kroger Co. says it expects the deal to result in cost savings of $40 million to $50 million over the next three to four years. It will finance the deal with debt and plans to assume Harris Teeter’s outstanding debt of about $100 million.