Kroger, one of the nation’s largest grocery chains, agreed to buy Giant Eagle, the largest Ohio-based grocery chain, for $3.3 billion in cash and stock. Kroger plans to use Giant Eagle’s 4,000 stores as a platform to expand Kroger’s presence in the midwestern United States.
Kroger plans to keep the Giant Eagle name and operate the stores under the Kroger banner. The deal is expected to close in the first quarter of 2019.
This deal marks Kroger’s second major grocery acquisition in the past year. Kroger acquired Harris Teeter in May for $2.3 billion. These deals demonstrate Kroger’s intent to become a larger player in the grocery industry.
Kroger’s acquisition of Giant Eagle will give the company a presence in Ohio and Pennsylvania, two of the country’s most populous states. Kroger plans to use the Giant Eagle stores as a platform to expand Kroger’s presence in the midwestern United States.
The deal is expected to close in the first quarter of 2019. Kroger is paying a price that is above the market value of the company.
However, Kroger’s stock has been trading at a lower price than the value of the Giant Eagle brand. Therefore, Kroger is likely to receive a higher return on its investment in the Giant Eagle acquisition than it would have if it had purchased the company at a market value.
