Kroger Co., the Cincinnati-based grocery giant, announced Wednesday plans to acquire Wisconsin-based rival Roundy’s Inc. for $3.60 per share or about 65 percent above Tuesday’s closing price, in a the deal valued at about $800 million.
“We are delighted to welcome Roundy's to the Kroger family,” Rodney McMullen, Kroger's chairman and chief executive officer, said in a statement. “With a team of 22,000 talented associates, outstanding store locations, and a shared commitment to putting customers first, we are excited about Roundy’s future growth.”
The deal, which is expected to close before the end of the year, will expand Kroger’s geographic footprint into Wisconsin as well as the Chicago metro area, where Roundy’s operates 34 stores under the Mariano’s name. It also operates stores and pharmacies using Copps, Metro Market and Pick ’n Save branding.
“We are excited about becoming part of The Kroger Co.,” Roundy’s board chairman, president and CEO Robert A. Mariano said in a statement. “Kroger's scale, knowledge and experience allows us to accelerate the strategic initiatives we have invested in and makes us a more formidable competitor in the marketplace. This is a great win for our customers, communities, employees and our shareholders.”
In announcing the plan, Kroger said it expects to see $40 million in savings over an undetermined amount of time but that the move is likely to hit earnings in the short term. Nonetheless, the company said it would continue quarterly dividends and a stock buyback program.
Once complete, Kroger will employ more than 420,000 people at about 2,700 supermarkets in 35 states and the District of Columbia.