Kroger to Buy Harris Teeter for $2.4 Billion

A Kroger-operated market in Del Mar, Calif. Kroger will acquire 212 Harris Teeter stores.
The Kroger Company, seeking to expand in the Southeast and mid-Atlantic regions, said on Tuesday that it would acquire Harris Teeter Supermarkets for $2.4 billion.
Kroger agreed to pay $49.38 a share in cash, about 2 percent above Harris Teeter’s closing price on Monday and 34 percent above the price on Jan. 18, when media reports emerged that Harris Teeter was exploring strategic alternatives.
Harris Teeter has 212 stores in North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia. The company also operates distribution centers for grocery, frozen and perishable foods in North Carolina. Harris Teeter posted $4.5 billion in revenue for the 2012 fiscal year.   Kroger said it would finance the transaction with debt and assume Harris Teeter’s outstanding debt of about $100 million. Harris Teeter will continue to operate its stores as a subsidiary of Kroger and will continue to be led by Harris Teeter’s senior management team. There are no plans to close stores.
Kroger expects the deal to result in savings of $40 million to $50 million over the next three to four years.
“This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates,” David B. Dillon, Kroger’s chairman and chief executive, said in a statement. “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.”

Thomas W. Dickson, the chairman and chief executive of Harris Teeter, said, “Harris Teeter has a long track record of creating shareholder value, and this merger is the culmination of those efforts over many years.”

Bank of America Merrill Lynch advised Kroger and Arnold & Porter served as legal adviser. J.P. Morgan Securities advised Harris Teeter, and McGuireWoods was its legal adviser.

Original Article authored by Dealbook for the NYTIMES and can be located here)http://dealbook.nytimes.com/2013/07/09/kroger-to-buy-harris-teeter-for-2-4-billion/?ref=business