Kroger to Acquire Harris Teeter in $2.5B Deal

CINCINNATTI -- Months of speculation on the fate of Harris Teeter was put to rest with news that The Kroger Co. will acquire the Matthews, N.C.-based regional supermarket chain in a deal valued at approximately $2.5 billion.

Kroger will purchase all outstanding shares of Harris Teeter for $49.38 per share in cash. This transaction price represents a 33.7-percent premium over Harris Teeter's closing share price on Jan. 18, 2013, the day it was first reported that the grocer was evaluating its strategic alternatives.

Terms of the agreement have been approved by the boards of directors of both companies -- the combination of which will give Kroger 2,631 supermarkets and more than 368,300 associates in 34 states and Washington, D.C. The deal will keep intact the Harris Teeter banner, management teams, new store growth plan, and its headquarters base, distribution and manufacturing facilities in North Carolina.

The 212 Harris Teeter locations being acquired by the nation's largest supermarket retailer are located in the Southeast and mid-Atlantic markets. The stores are primarily in high-growth markets, vacation destinations and university communities in North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and Washington, D.C.

Harris Teeter, which also operates grocery, frozen and perishable distribution centers in Greensboro and Indian Trail, N.C., as well as a dairy facility in High Point, N.C., posted revenues of approximately $4.5 billion in its 2012 fiscal year.

"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," said David B. Dillon, Kroger's chairman and CEO. "They share our customer-centric approach to everything we do -- from store format and merchandising to innovative loyalty programs. This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates. We look forward to bringing together the best of Kroger and Harris Teeter, while continuing to operate and grow the Harris Teeter brands. Together, we can continue to deepen our connections with customers across all of our markets."

Harris Teeter Chairman and CEO Thomas W. Dickson said this deal is the culmination of efforts over many years. "We are excited about becoming part of The Kroger Co., one of the best food retailers in the U.S.," Dickson said. "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."

Upon closing, Harris Teeter will continue to operate its stores as a subsidiary of The Kroger Co. and be led by key members of Harris Teeter's senior management team. There are no plans to close stores and associates will continue to have employment opportunities with both companies. Kroger's headquarters will remain in Cincinnati and Harris Teeter will keep its Matthews, N.C., headquarters.

Kroger will finance the transaction with debt.

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