Kroger to buy Harris Teeter for about $2.44B - WCIV-TV | ABC News 4 - Charleston News, Sports, Weather

Kroger to buy Harris Teeter for about $2.44B

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CINCINNATI (WCIV/AP) - Kroger, the country's largest traditional supermarket operator, said Tuesday that it has agreed to buy Harris Teeter Supermarkets Inc. for about $2.44 billion in cash.

The deal expands Cincinnati-based Kroger's store base in the southeastern and mid-Atlantic markets and increases the number of states it operates in by three to 34.

"We can tell you our name will remain Harris Teeter; our own brands will continue to reflect our name," Harris Teeter's president and COO Fred Morganthall said in a statement Tuesday. "We will continue to be committed to delivering excellent customer service and outstanding quality."

Under the terms of the agreement, Kroger will pay $49.38 for each of the fellow supermarket chain's shares. The price represents a 2 percent increase over the company's Monday closing stock price.

"This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates," Kroger Chairman and CEO David Dillon said in a statement.

The deal has been approved by both companies' boards. Harris Teeter announced in February that it was exploring strategic alternatives, including a possible sale.

Harris Teeter operates 212 stores in eight southeastern and mid-Atlantic states and Washington DC, along with a pair of distribution centers and a dairy facility in North Carolina. Its fiscal 2012 revenue totaled about $4.5 billion.

"Harris Teeter has a long track record of creating shareholder value and this merger is the culmination of those efforts over many years," said Thomas W. Dickson, Chairman of the Board and Chief Executive Officer of Harris Teeter. "We are excited about becoming part of The Kroger Co., one of the best food retailers in the U.S. while maintaining the Harris Teeter banner, our management teams, our new store growth plan, our distribution and manufacturing facilities in North Carolina as well as our headquarters in Matthews, NC. As part of Kroger, Harris Teeter will be well equipped to continue to provide our customers outstanding quality and customer service as well as excellent value in an increasingly competitive market."

In comparison, Kroger operates 2,419 stores in 31 states. In addition to its flagship brand of supermarkets, it also owns Ralphs, Fry's and Food 4 Less.

After the deal closes, Harris Teeter will become a Kroger subsidiary and will continue to be led by members of its current senior management.  There are no plans to close stores and the company will remain based in Matthews, N.C.

Kroger Co. says it expects the deal to result in cost savings of $40 million to $50 million over the next three to four years. It will finance the deal with debt and plans to assume Harris Teeter's outstanding debt of about $100 million.

In premarket trading, Harris Teeter shares edged up 42 cents to $48.95, while Kroger shares rose 37 cents to $36.56.

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