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LivestreamMenuA Giant Eagle Inc. Market District supermarket stands in Pittsburgh, Pennsylvania, U.S., on Tuesday, Oct. 29, 2019.Allison Ferrand | Bloomberg | Getty Images
Kroger said on Wednesday it would buy regional supermarket chain Giant Eagle in a $1.65 billion deal, strengthening its presence in the Midwest and the Mid-Atlantic region amid intensifying competition.
The transaction, the first under CEO Greg Foran, is also the company’s first major acquisition since its $25 billion merger with Albertsons fell apart in 2024.
Family-owned Giant Eagle generates about $9 billion in annual sales and operates around 197 supermarkets and 11 standalone pharmacies across northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana.
“We evaluated the opportunity carefully, and the strategic fit is clear. Giant Eagle expands our reach into attractive adjacent markets,” Foran said.
Shares of Cincinnati, Ohio-based Kroger were down about 2% in premarket trading.
The company has been battling intense competition from Walmart, Amazon and other grocers as value-conscious consumers facing cost-of-living pressures seek cheaper essentials.
Kroger has said it plans price cuts on thousands of items, funded partly by direct imports and better use of technology.
“This acquisition comes at a challenging time for traditional grocers,” Consumer Edge analyst Michael Gunther said, adding that specialty banners such as Trader Joe’s are outperforming and discounters including Aldi are pulling in trade-down traffic.
Giant Eagle’s customer base skews to a more resilient older shopper, Gunther added.
Dealmaking in the consumer sector, including food, beverage, personal care, pet products and health, has been robust as companies consolidate to weather inflationary pressures, shifting consumer preferences and competition.
The deal consists of $1.25 billion in cash and the assumption of about $400 million of Giant Eagle’s outstanding liabilities, Kroger said.
The retailer expects the deal to close in 2027 and add to adjusted profit in the second full year after completion.
Kroger expects to continue its dividend and $2 billion share repurchase program while maintaining a target net total debt-to-adjusted EBITDA ratio of 2.3 to 2.5.
RBC Capital Markets is the financial adviser to Kroger, while Wells Fargo is advising Giant Eagle.
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