Kroger sells its convenience store business
On February 6, 2018, Kroger (KR) announced that it has entered into a definitive agreement with EG Group regarding the sale of its convenience store business.
The deal is valued at $2.15 billion and includes Kroger’s convenience stores located in 18 states under the Turkey Hill, Kwik Shop, Loaf ‘N Jug, Tom Thumb, and Quik Stop banner names. Kroger’s supermarket gas stations and its Turkey Hill Dairy aren’t part of the deal.
“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 executive vice president and CFO.
Kroger is the largest supermarket in the US. Kroger clocked trailing 12-month sales of $119 billion. Kroger’s convenience store business is relatively small and generates close to $4 billion in revenue.
EG Group enters the US with Kroger’s convenience stores
The deal marks EG Group’s entry in the US. EG Group is a privately owned convenience store chain in the United Kingdom.
“This is an exciting time for EG Group, the entry into the US market presents a fantastic opportunity to deliver a successful retail offer to consumers across the various states,” said Mohsin Issa, EG Group’s founder and co-CEO.
EG Group operates fuel-based convenience stores in over 2,600 locations across Europe. The company has agreed to create its North American headquarters in Cincinnati after the transaction. EG Group will continue to the operate convenience stores under the current banner names.
Next, we’ll discuss why Kroger decided to sell its business and how investors responded to the deal.