Kroger to buy Harris Teeter supermarkets - WFLA News Channel 8

Kroger to buy Harris Teeter supermarkets

Posted: Updated:
Credit: Wikimedia Commons Credit: Wikimedia Commons
RALEIGH, N.C. -

Shoppers at Triangle Harris Teeter stores, as well as those at Kroger supermarkets were abuzz Tuesday with the news of a merger.

Kroger, already the country's largest traditional supermarket operator, is expanding its reach in key southeastern and mid-Atlantic states by snapping up regional grocer Harris Teeter.

The $2.44 billion cash deal reflects Kroger's growth plans at a time when supermarkets are fighting competition from big-box retailers such as Target Corp. and Wal-Mart Stores Inc., as well as drugstores and dollar stores that are expanding their food sections.

Harris Teeter has 212 stores in eight states, many in NC.

Kroger says it doesn't plan to close any stores as a result of the acquisition. But in the regions where there is some overlap, it may be asked by the Federal Trade Commission to sell stores to other operators to maintain a competitive landscape, said Mike Schlotman, Kroger's chief financial officer. After Kroger's last major purchase of Fred Meyer in 1999, he said the agency asked it to sell eight stores.

Harris Teeter stores will keep their names and personalities, as with the nearly two dozen other regional chains owned by Kroger, including Ralphs in Southern California, Fred Meyer in the Pacific Northwest and Fry's in Phoenix, the company said.

"I don't see a lot of change that we would make to Harris Teeter," Schlotman said. "It already has a large fresh and prepared section — that's one of the things they're good at."

That focus on fresh and prepared foods is what makes the deal so attractive to Kroger. While they're not on the level of Whole Foods supermarkets, Harris Teeter stores tend to be in more affluent neighborhoods and are more profitable because they have bigger fresh food sections.

Kroger, meanwhile, has been expanding the ranks of its "Fresh Fare" stores, which have bigger sections for produce, meat, seafood and prepared foods. These categories tend to have higher profit margins than the rest of the store, Schlotman said.

Notably, Harris Teeter also offers a "click and collect" service in about half its stores that lets people shop online then pick up their groceries curbside or at the front of the store.

"It's very popular in Europe, and now we get the chance to understand the process with someone that has it in place," Schlotman said.

Harris Teeter, along with Ralphs, will be one of Kroger's largest chains by store count.

Under the terms of the agreement, Kroger will pay $49.38 for each of Harris Teeter's shares. The price represents a 2 percent increase over the company's Monday closing stock price. The deal has been approved by both companies' boards, but remains subject to Harris Teeter shareholder approval.

Kroger, based in Cincinnati, operates 2,419 stores in 31 states. Its namesake stores account for more than half its stores.

Of Harris Teeter's 212 stores, 138 are in North Carolina, with 55 of those in the Charlotte area. Another 55 stores are in the Washington D.C., area. Its fiscal 2012 revenue totaled about $4.5 billion.

Schlotman said the deal marks Kroger's entry into several attractive, high-growth markets such as Charlotte, N.C., and Washington D.C. But he declined to say whether the company planned to eventually expand to all 50 states.

"We don't have a map of the U.S. with pins saying, 'We're going to here and we'll never go there,' " he said.

After the deal closes, Harris Teeter will become a Kroger subsidiary and will continue to be led by members of its current senior management. The division will remain based in Matthews, N.C.

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.

In morning trading, Harris Teeter shares rose 47 cents to $48.99, while Kroger shares rose $1.10, or 3 percent, to $37.29.

  • North Carolina NewsMore>>

  • Marijuana group celebrates 4/20 with new Raleigh chapter

    Marijuana group celebrates 4/20 with new Raleigh chapter

    Monday, April 21 2014 5:09 AM EDT2014-04-21 09:09:11 GMT
    On this twentieth day of April, 4/20, some people in Raleigh are pushing for changes to the state's marijuana laws.
    On this twentieth day of April, 4/20, some people in Raleigh are pushing for changes to the state's marijuana laws.
  • NC report expands on jobless rate drop, more work

    NC report expands on jobless rate drop, more work

    North Carolina officials are releasing a report offering more details on employment conditions in March, when nearly 20,000 jobs were added and the jobless rate fell to 6.3 percent.
    North Carolina officials are releasing a report offering more details on employment conditions in March, when nearly 20,000 jobs were added and the jobless rate fell to 6.3 percent.
  • McCrory coal ash announcement miffs GOP lawmakers

    McCrory coal ash announcement miffs GOP lawmakers

    Sunday, April 20 2014 3:48 PM EDT2014-04-20 19:48:26 GMT
    Some lawmakers say they were surprised and miffed by fellow Republican Gov. Pat McCrory's announcement that he's seeking legislation to beef up government oversight of coal ash dumps.
    Some lawmakers say they were surprised and miffed by fellow Republican Gov. Pat McCrory's announcement that he's seeking legislation to beef up government oversight of coal ash dumps.
Powered by WorldNow

200 South Parker Street, Tampa, FL 33606

Telephone: 813.228.8888
Fax: 813.225.2770
Email: news@wfla.com

Can’t find something?
Powered by WorldNow
All content © Copyright 2000 - 2014 Media General Communications Holdings, LLC. A Media General Company.