Kroger has formed a definitive agreement for the sale of its convenience store business unit to EG Group, a privately held convenience store retailer based in the United Kingdom, for $2.15 billion.
The companies expect the transaction to close during the first quarter of Kroger’s fiscal year. As part of the agreement, EG Group will establish a North American headquarters in Cincinnati, where Kroger is based, and continue to operate stores under their established banners.
Kroger announced in October 2017 that the company intended to explore strategic alternatives for its convenience store business, including a potential sale, in conjunction with its Restock Kroger initiative to update overall operations. The company plans to use net proceeds from the sale to repurchase shares and lower its net total debt to adjusted EBITDA ratio.
The Kroger convenience store business includes 784 stores with a presence in 18 states. Convenience stores operate under the banners Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger’s convenience store business generated revenue of $4 billion in 2016, according to the company.
“Our convenience store business has been a part of our company for many years,” said Mike Schlotman, Kroger’s evp/chief financial officer. “We want to thank our management team and associates for their enduring commitment to our customers, and for the contributions they have made to build our supermarket fuel business. As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business.”