US retail giant Kroger has struck a deal to buy regional supermarket chain Harris Teeter in a for US$2.44bn.
The move, which comes five months after Harris Teeter hired JP Morgan to help explore sale options, will see Kroger purchase all outstanding shares for $49.38 per share in cash.
The price represents a premium of 33.7% to the Harris Teeter closing share price on 18 January, the day of the first media report it was evaluating strategic alternatives.
Kroger said Harris Teeter will maintain its headquarters in North Carolina. However, the company said it expects to achieve annual cost savings of around $40m to $50m by combining the two companies.
The buyout gives Kroger control of a chain that had revenue of $4.54bn last year and 212 stores in south-eastern US states, including North Carolina, Virginia and South Carolina.
Harris Teeter CEO Thomas Dickson said: “Harris Teeter has a long track record of creating shareholder value and this merger is the culmination of those efforts over many years. We are excited about becoming part of The Kroger Co., one of the best food retailers in the US while maintaining the Harris Teeter banner, our management teams, our new store growth plan, our distribution and manufacturing facilities in North Carolina as well as our headquarters in Matthews.”
Kroger will finance the transaction with debt. The company also intends to assume Harris Teeter’s outstanding debt of around $100m.
Harris Teeter had remained tight-lipped over who had expressed an interest in the company, with private-equity firm Cerberus Capital Management, US retailer Publix and Dutch grocer Ahold all having been linked to the business.