The Kroger Co. announced Tuesday that they have entered into a merger agreement with Harris Teeter Supermarkets, Inc.; however, as per their agreement, Harris Teeter will remain an independent subsidiary.
“Harris Teeter will continue to operate its stores as a subsidiary of The Kroger Co. and will continue to be led by key members of Harris Teeter’s senior management team,” said a Kroger’s representative.
Together the companies will operate 2,631 supermarkets and employ over 368,300 associates across 34 states and the District of Columbia.
They have no plans to close any stores, and furthermore, intend for associates from both companies to remain employed under the new structure. The two supermarket companies will also retain their separate headquarters.
Kroger’s Chairman and Chief Executive Officer David B. Dillion praised Harris Teeter for its service and brand identity and said he believes the supermarket shares many of his company’s values.
“We are excited to welcome Harris Teeter to the Kroger family,” said Dillion. “Harris Teeter is an exceptional company with a great brand, friendly and talented associates and attractive store formats in vibrant markets run by a first-class management team. They share our customer-centric approach to everything we do, from store format and merchandising to innovative loyalty programs.”
A representative of the Kroger Co. said the Harris Teeter supermarket chain would “bring to Kroger an exceptional brand and complementary base of 212 stores in attractive southeastern and mid-Atlantic markets including Washington, DC.”
Kroger described these locations as being in either “high-growth” or “vacation-destination” markets.
Northern Virginia likely falls within the “high growth” market as new Harris Teeter stores have accompanied the growth of new communities in Prince William County over the past decade. Harris Teeter currently has store locations in Bristow, Haymarket and Manassas, as well as farther east in Northern Virginia.
According to the terms of the merger agreed upon by the board of directors of the two companies, The Kroger Co. purchased all outstanding shares of Harris Teeter at $49.39 per share in cash. However, by joining Harris Teeter into Kroger’s fold, Kroger is also assuming approximately $100 million of Harris Teeter’s outstanding debt.
Kroger said the company “expects to allocate some free cash flow to debt reduction to re-establish and maintain (their current debt ratios),” and thus preserve its current investment-grade credit rating. It is also dedicated to returning cash to share holders through their investment dividends.
Kroger, one of the world's largest retailers, employs 343,000 associates who serve customers in 2,419 supermarkets and multi-department stores in 31 states under two dozen local banner names including Kroger, City Market, Dillon's, Jay C, Food 4 Less, Fred Meyer, Fry's, King Soopers, QFC, Ralph's and Smith's. The company also operates 784 convenience stores, 322 fine jewelry stores, 1,182 supermarket fuel centers and 37 food-processing plants in the U.S.
Recognized by Forbes as the most generous company in America, Kroger supports hunger-relief, breast cancer awareness, the military and their families, and more than 30,000 schools and grassroots organizations. Kroger contributes food and funds equal to 200 million meals a year through more than 80 Feeding America food bank partners. A leader in supplier diversity, Kroger is a proud member of the Billion Dollar Roundtable and the U.S. Hispanic Chamber's Million Dollar Club.
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