CINCINNATI and CHICAGO, May 23,
2018 /PRNewswire/ -- The Kroger Co. (NYSE: KR) and Home
Chef, the country's largest private meal kit company, today
announced a merger agreement that will significantly accelerate
availability of meal kits and position the combined company to lead
the way in revolutionizing how families shop for, prep, and cook
their meals. The initial transaction price is $200 million and future earnout payments of up to
$500 million over five years are
contingent on achieving certain milestones, including significant
growth of in-store and online meal kit sales. The pending merger
comes on the heels of Home Chef's 150% growth in 2017, $250M in revenue, and two profitable
quarters.
"Customers want convenience, simplicity and a personalized food
experience. Bringing Home Chef's innovative and exciting products
and services to Kroger's customers will help make meal planning
even easier and mealtime more delicious," said Yael Cosset,
Kroger's chief digital officer. "This merger will introduce
Kroger's 60 million shoppers to Home Chef, enhance our ship-to-home
and subscription capabilities, and contribute to Restock
Kroger."
"We've long believed that the future of our industry is
omni-channel and bigger than just meal kits sold online. We want to
be where our customers are and want to help make cooking at home
easier, more accessible and even more enjoyable," said Pat Vihtelic, Home Chef's founder and CEO.
"We're thrilled that we will be part of the Kroger family and plan
to maintain our relentless focus on innovation that meets
customers' evolving food needs. Kroger's expansive retail footprint
will allow us to serve millions of more customers across the
country with simple, convenient and enjoyable meal solutions."
Home Chef features delicious and approachable meals that fit
every taste preference and easy-to-follow recipes for every
experience level. They currently lead the industry with the most
variety among the leading meal kit companies and have gone beyond
the one-size-fits-all model to bring new innovations like 5 Minute
Lunches, Flexible Serving options, and new, easy-to-prepare meals
that require minimal prep. Home Chef's offerings complement
Kroger's Prep+Pared offering that is currently available in more
than 525 stores.
Home Chef employs approximately 1,000 employees, is
headquartered in downtown Chicago,
and operates three distribution centers in Chicago, Atlanta and San
Bernardino. Home Chef's distribution centers reach 98% of
all continental U.S. households within a two-day delivery
window.
"As one of the fastest growing meal kit companies in the
country, Home Chef is poised for even more explosive growth," said
Mr. Cosset. "We admire their focus on the customer, culture of
collaboration, dynamic experimentation, and demonstrated financial
success. Home Chef's combination of culinary expertise and a
customer data driven decision-making process is right in line with
Kroger's vision to serve America through food inspiration and
uplift by providing meal solutions for every lifestyle."
After the deal closes, Home Chef will operate as a subsidiary of
The Kroger Co., maintain its e-commerce business on homechef.com,
and assume responsibility for Kroger's meal solutions portfolio.
The company will continue to operate its offices and
facilities.
Following closing, Kroger will make Home Chef meal kits
available to Kroger shoppers, both in stores and online.
Kroger expects the transaction to have no effect on 2018
earnings, and to be slightly accretive in 2019.
Additional Information
The transaction is expected to close in the second quarter,
following the satisfaction of customary closing conditions,
including regulatory approval.
Weil, Gotshal & Manges LLP is acting as legal advisor to
Kroger and Sidley Austin LLP is acting as legal advisor to Home
Chef.
About Kroger
At The Kroger Co. (NYSE: KR), we are
dedicated to our Purpose: to Feed the Human Spiritâ„¢. 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.
About Home Chef
Home Chef is one of the largest meal
kit delivery companies in the U.S., with over 3 million meals
delivered each month. Founded in 2013, Home Chef offers fresh,
pre-portioned ingredients and easy to follow recipes delivered
weekly and is designed for anyone to be able to cook and everyone
to enjoy. The Chicago-based
company delivers nationwide from its distribution centers in the
Chicago, Atlanta, and Los
Angeles areas. Home Chef was recently honored by
Entrepreneur Magazine as part of the 2018 list of the Best
Entrepreneurial Companies in America. Find out more and get cooking
at www.homechef.com. Follow us on Twitter, Instagram and Facebook
for live updates and delicious inspiration.
Forward-Looking Statements
This press release
contains "forward-looking statements" within the meaning of the
safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995 about future performance of Kroger.
These statements are based on management's assumptions and beliefs
in light of the information currently available to it. These
statements are indicated by words such as "will," "continue,"
"expect," "poised," and similar words. Various uncertainties
and other factors could cause actual results to differ materially
from those contained in the forward-looking statements. These
include the specific risk factors identified in "Risk Factors" and
"Outlook" in Kroger's annual report on Form 10-K for our last
fiscal year and any subsequent filings, as well as the
following:
- Kroger's ability to achieve sales, earnings and cash flow
goals may be affected by: labor negotiations or disputes; changes
in the types and numbers of businesses that compete with Kroger;
pricing and promotional activities of existing and new competitors,
including non-traditional competitors, and the aggressiveness of
that competition; Kroger's response to these actions; the state of
the economy, including interest rates, the inflationary and
deflationary trends in certain commodities, and the unemployment
rate; the effect that fuel costs have on consumer spending;
volatility of fuel margins; changes in government-funded benefit
programs; manufacturing commodity costs; diesel fuel costs related
to Kroger's logistics operations; trends in consumer spending; the
extent to which Kroger's customers exercise caution in their
purchasing in response to economic conditions; the inconsistent
pace of the economic recovery; changes in inflation or deflation in
product and operating costs; stock repurchases; Kroger's ability to
retain pharmacy sales from third party payors; consolidation in the
healthcare industry, including pharmacy benefit managers; Kroger's
ability to negotiate modifications to multi-employer pension plans;
natural disasters or adverse weather conditions; the potential
costs and risks associated with potential cyber-attacks or data
security breaches; the success of Kroger's future growth plans; the
ability to execute on Restock Kroger; and the successful
integration of Harris Teeter and
Roundy's. Kroger's ability to achieve sales and earnings goals may
also be affected by Kroger's ability to manage the factors
identified above. Kroger's ability to execute its financial
strategy may be affected by its ability to generate cash flow. The
consummation of the merger is contingent upon regulatory approval
and the conditions of the merger being satisfied or waived. Earnout
payments are contingent on the achievement of performance goals.
Our ability to accelerate market growth of meal kits and enhance
Restock Kroger will depend on customer acceptance, execution,
competitive forces, and other factors.
We assume no obligation to update the information contained
herein. Please refer to Kroger's report and filings with the
Securities and Exchange Commission for a further discussion of
these risks and uncertainties.
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SOURCE Home Chef