Kroger sells c-store unit to U.K. retailer
Kroger on Monday inked a deal with EG Group, a privately-held petrol forecourt c-store retailer based in Blackburn, England, on the sale of Kroger’s c-store business unit for $2.2 billion. The companies expect to close the transaction during the first quarter of Kroger’s fiscal year.
As part of the agreement, EG Group will establish their North American headquarters in Kroger’s hometown market Cincinnati and continue to operate stores under their established banner names, which include Turkey Hill, Tom Thumb and Quik Stop.
“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 executive vice president and CFO. “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.”
“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,” Mohsin Issa, EG Group founder and co-CEO, said. “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 US. 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.”
Kroger’s convenience store business operates in 18 states. It includes 66 franchise operations. The stores employ 11,000 associates and operate under the following banner names: Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger’s convenience store business generated revenue of $4 billion, including selling 1.2 billion gallons of fuel, in 2016.
Kroger announced in October 2017 its intention to explore strategic alternatives for its convenience store business, including a potential sale, in conjunction with Restock Kroger.
Kroger plans to use net proceeds from the 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 are not included in the sale.
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