The Kroger Co. has completed its acquisition of Harris Teeter Supermarkets Inc., providing a potential platform for future growth.
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CINCINNATI - The Kroger Co. has completed its acquisition of Harris Teeter Supermarkets Inc., bringing 227 new stores and expanding Kroger's geographic footprint into the Southeastern U.S.
The $2.5 billion acquisition closed Jan. 28. The combined companies operate 2,641 stores with 368,000 employees. Harris Teeter brings $4.7 billion in new revenue to the Cincinnati-based grocery chain. It will operate as a Matthews, N.C. -based subsidiary of Kroger. Harris Teeter CEO Thomas Dickson and John Woodlief, executive vice president and chief financial officer, are leaving the company.
“We are pleased that our merger is complete and look forward to bringing together the best of Kroger and Harris Teeter to benefit our customers, associates and shareholders,” said W. Rodney McMullen, Chief Executive Officer of Kroger, in a Kroger press release. “We have long respected Harris Teeter’s customer orientation, friendly and professional associates, strong management team, and company values – which are consistent with ours. Together, through our Customer 1st Strategy, we are going to be an outstanding combination.”
Kroger repeated earlier predictions that the transaction increase earnings by $0.06 and $0.09 per share within one year, thanks in part to operational savings of $40 million to $50 million annually. Kroger vowed to maintain profit levels high enough to keep its investment grade debt rating, while continuing share-repurchase and dividend programs that benefit investors.
Experts told WCPO that Kroger could use the Harris Teeter acquisition as a platform for expansion into Florida and the Northeastern U.S., two geographic territories where Kroger has yet to compete on a large scale. Kroger executives have expressed an interest in expanding Harris Teeter's "click and collect" grocery program, where shoppers order online and pick up their groceries at the store.
"When you look at it in terms of on people, products and shopping experience, they score meaningfully better than Kroger," McMullen told analysts at an investor conference in December. "I can tell you, we're really anxious to get started to really understand how they do that in terms of the behind the scenes, what are they doing to make that happen, because anything that we can find like that that we can take across all of Kroger is great."