Retail
Kroger's Turnaround Brings in $2.15 Billion for Sale of Convenience Store Operations
Published:
Last Updated:
Kroger Co. (NYSE: KR) has been doing what it can to regain lost ground for shareholders over the past year. As its shares have recovered, much of the Amazon-Whole Foods fears have abated, and now Kroger has just made a new move that will raise more than $ 2 billion in capital. Kroger announced on Monday that it has entered into a definitive agreement sell its convenience store business unit to privately held EG Group. The price tag was stated as $2.15 billion.
While this news is just one more bit of focus for Kroger, the company announced last October that it would explore strategic alternatives for its convenience store business. The companies indicated that the deal is expected to close during the first quarter of Kroger’s fiscal year.
Kroger plans to use the proceeds from this sale to repay debt to lower its net total debt to adjusted EBITDA ratio and also to repurchase common shares.
What EG will get here is 762 convenience stores spread over 18 states. Its store brand names include Kwik Shop, Turkey Hill, Quik Stop and Tom Thumb. According to Kroger, the convenience stores accounted for roughly $4 billion in revenues, sold roughly 1.2 billion gallons of gasoline and employ roughly 11,000 people. Kroger’s supermarket fuel centers and its Turkey Hill Dairy are not included in the sale.
For a reference to the big picture here, Kroger’s total revenues were $115 billion in 2016, and the company claims roughly 450,000 company associates and 2,790 supermarkets and multi-department stores across its entire system.
Mike Schlotman, Kroger’s executive vice president and chief financial officer, said of the convenience store 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. 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.
The deal is not that substantial to Kroger’s operations, but Wall Street is basically discounting the news. Kroger shares were last seen down 0.5% at $29.20 on Monday, in a 52-week range of $19.69 to $34.75. Kroger’s consensus analyst target price was $28.73.
The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.
Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.
A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.
Click here to learn how to get a quote in just a few minutes.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.