Kroger, the supermarket operator, announced a deal to sell its convenience store business to EG Group, the U.K.-based convenience store retailer.
In a press release, Kroger said it is selling the unit for $2.15 billion, with the deal expected to close in the first quarter of Kroger’s fiscal year. As part of the deal, the companies announced EG Group will create a U.S. headquarters in Cincinnati, Ohio and will operate the stores under their banner names. In October of 2017, Kroger announced it was looking for an alternative for its convenience store business, which included the potential for a sale.
“Our convenience store business has been a part of our company for many years. We want to thank our management team and associates for their enduring commitment to our customers, and for the contributions they have made to build our supermarket fuel business,” Mike Schlotman, Kroger’s executive vice president and chief financial officer, said in the press release. “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.”
Kroger said the proceeds from the sale will be used to buy back stock and to lower its net total debt to adjusted EBITDA ratio. Kroger’s convenience store business is in 18 states and has 66 franchise operations.
“This is an exciting time for EG Group; the entry into the U.S. 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 U.S. We are committed to investing in the Kroger network, partnering with leading retail brands and working with the exceptional management team and associates transferring across to deliver a comprehensive retail offer.”