The Kroger Co. and EG Group, a privately-held convenience store and fuel retailer based in Blackburn, Lancashire, United Kingdom, has announced a definitive agreement for the sale of Kroger’s convenience store business unit to EG Group for $2.15 billion. The companies expect to close the transaction during the first quarter of Kroger’s fiscal year.
Kroger’s convenience store business operates in 18 states and includes 66 franchise operations. The stores employ 11,000 associates and operate under the following banner names: Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger’s convenience store business generated revenue of $4 billion, including selling 1.2 billion gallons of fuel, in 2016.
Kroger’s supermarket fuel centers and its Turkey Hill Dairy, based in Conestoga, PA, are not included in the sale.
As part of the agreement, EG Group will establish its North American headquarters in Cincinnati, OH and continue to operate stores under its established banner names.
Kroger announced in October 2017 its intention to explore strategic alternatives for its convenience store business, including a potential sale, in conjunction with Restock Kroger, the big chain’s initiative to restructure the layout and operational procedures of the company’s nearly 2,800 supermarkets and combination stores. Once Kroger announced it was exploring a sale of its c-store unit, the largest pure play supermarket chain in the U.S. reportedly attracted multiple bidders.
“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,” said Mike Schlotman, Kroger’s executive VP and CFO. “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.”
“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. EG Group is also a recognized international petrol forecourt convenience operator and they have a commercial model which clearly looks to enhance the consumer offer by working with leading retail brands customers know and trust,” noted Schlotman. “This is good for our associates across the country and for our headquarter city of Cincinnati. Throughout the process we were impressed with the EG Group’s professionalism, investment commitment and more importantly their understanding of the US convenience retail market. We now look forward to working with them closely to ensure a smooth transition for associates.”