US retailer Kroger has announced that it is selling its convenience-store business to forecourt retail operator Euro Garages (EG Group) for $2.15 billion.
Kroger operates nearly 800 convenience stores across 18 US states, under retail banners such as Turkey Hill, Kwik Shop, Tom Thumb and Quik Stop.
As part of the agreement, UK-based EG Group will establish a North American headquarters in Cincinnati, Ohio, and continue to operate the acquired stores under their established banner names.
“This is an exciting time for EG Group. The entry into the US market presents a fantastic opportunity to deliver a successful retail offer to consumers across the various states,” said Mohsin Issa, EG Group founder and co-CEO.
“We have had much success across Europe, and we firmly believe the Kroger assets present a fantastic foundation to overlay our retail experience and know-how in the US. We are committed to investing in the Kroger network,” Issa added.
Kroger first announced that it was considering selling its convenience business last October, as part of a strategic review.
The retail company now says that it will use proceeds from the sale to repurchase shares and to lower its net total debt to adjusted EBITDA ratio.
“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,” said Mike Schlotman, Kroger’s chief financial officer.
“One of the most important considerations in our decision-making process was continued operations, to ensure minimal disruption to our associates. We are very pleased the EG Group plans to establish their North American headquarters in Cincinnati,” added Schlotman.
The transaction is expected to close during the first quarter of Kroger’s financial year.
The EG Group currently operates in the UK, France, the Netherlands, Belgium, Luxembourg and Italy. With the inclusion of the Kroger assets, EG Group will own and operate around 4,400 sites across Europe and the US.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.