CINCINNATI, April 20, 2018 /PRNewswire/ -- The Kroger
Co. (NYSE: KR) today announced it has completed the sale of its
convenience store business unit to EG Group for $2.15 billion.
After tax proceeds total $1.7
billion. $1.2 billion of the
proceeds will be used to fund an accelerated share repurchase
("ASR") program.
"Throughout the sales process, we have been impressed with EG
Group's professionalism, commitment to people, and understanding of
the U.S. convenience retail market," said Mike Schlotman, Kroger's executive vice
president and chief financial officer. "I can't stress enough how
important to our success Kroger's convenience store management and
associates have been, and we want to thank them for all of their
contributions to our customers and our company."
Kroger announced in October 2017
its intention to explore strategic alternatives for its convenience
store business, including a potential sale, in conjunction with
Restock Kroger. In February, Kroger and EG Group announced a
definitive agreement for the sale of Kroger's convenience store
business unit to EG Group.
Kroger entered into an ASR agreement today with Goldman Sachs
& Co. LLC. ("Goldman"), pursuant to which on April 24, 2018, Kroger will pay $1.2 billion to Goldman, who will make an initial
delivery to Kroger of approximately 36.1 million Kroger common
shares. The total number of shares that Kroger ultimately
will receive under the ASR will be based generally on the average
of the daily volume-weighted average prices of shares traded during
the term of the agreement, subject to a collar provision that will
establish minimum and maximum numbers of shares to be
repurchased. The $1.2 billion
ASR is an additional repurchase authorization approved by Kroger's
Board of Directors, which is incremental to the $1 billion share repurchase program announced on
March 15, 2018.
Kroger will use the balance of the after tax proceeds to lower
its net total debt to adjusted EBITDA ratio.
"Kroger is committed to creating shareholder value," said Mr.
Schlotman. "We are returning a significant amount of capital to
shareholders through a $1.2 billion
accelerated share repurchase program authorized by our Board of
Directors."
The Transition Services Agreement (TSA) Kroger has in place with
EG Group will not have a material effect on the company's 2018
results, nor will it have any effect on Kroger's 2018 net earnings
per diluted share guidance. The TSA covers a variety of services
for varying lengths of time.
Included in the sale were 762 convenience stores, including 66
franchise operations, operating in 18 states and employing 11,000
associates under the following banner names: Turkey Hill, Loaf 'N
Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger's supermarket fuel
centers and its Turkey Hill Dairy were not included in the sale. EG
Group will establish their North American headquarters in
Cincinnati, Ohio and continue to
operate stores under their established banner names.
At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose:
to Feed the Human Spirit™. We are nearly half a
million associates who serve nine million customers daily through a
seamless digital shopping experience and 2,800 retail food stores
under a variety of banner names, serving America through food
inspiration and uplift, and creating #ZeroHungerZeroWaste
communities by 2025. To learn more about us, visit our newsroom and
investor relations site.
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SOURCE The Kroger Co.