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Harris-Teeter Deal Gives Kroger Upscale Alternative

The Kroger Co. has announced that it and Harris Teeter Supermarkets, Inc. have finalized a definitive merger agreement. As part of the deal, Kroger will purchase all outstanding Harris Teeter stock for $49.38 per share in cash.

A traditional supermarket chain that leans to the gourmet side, Harris Teeter had revenues of $4.5 billion in the 2012 fiscal year, Kroger reported. In fiscal 2012, Kroger generated $96.75 billion in sales, according to the company’s annual report. Although sticking to the middle of the marketplace, Kroger recently has expanded particular product categories to satisfy consumers with gourmet sensibilities, such as wine in those markets where it can carry adult beverages. Harris-Teeter provides Kroger a somewhat more upscale operation it can potentially grow but that also provides additional knowledge about gourmet-oriented operations that it can diffuse through the organization.

Kroger noted that Harris Teeter brings to its operation a recognized brand and complementary base of 212 stores in attractive southeastern and mid-Atlantic markets and in Washington, D.C. The stores are located primarily in high-growth geographies, vacation destinations and university communities across North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia.

In announcing the acquisition David Dillon, Kroger’s chairman and CEO said that Kroger would continue “to operate and grow the Harris Teeter brands.”

Although traditionally well-regarded in its core markets, Harris-Teeter has had limited success in expanding to new territories, while it has endured increasing competition from larger and more financially potent rivals including Walmart and Costco.