UK-based EG Group to Buy Kroger’s Convenience Store Business for $2.1B

CINCINNATI — United Kingdom-based EG Group has agreed to acquire Kroger’s (NYSE: KR) convenience store business for $2.1 billion.

Kroger’s convenience store arm employs 11,000 workers in 18 states across 66 franchise operations. The stores operate under the brands Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger’s convenience store business generated $4 billion in revenue, including the sale of 1.2 billion gallons of fuel, in 2016.

EG Group will establish its North American headquarters in Cincinnati and continue to operate the stores under their established brand names. It is the company’s first venture in the United States. Kroger’s supermarket fuel centers and its Turkey Hill Dairy are not included in the sale.

Kroger plans to use net proceeds from the sale to repurchase shares and to lower its ratio of net total debt to adjusted EBITDA.

Goldman Sachs & Co. LLC is acting as exclusive financial advisor to Kroger, with Weil, Gotshal & Manges LLP acting as legal advisor.

Morgan Stanley, Bank of America Merrill Lynch and Barclays are acting as financial advisors to EG Group, while Allen & Overy is acting as legal advisor.

EG Group was founded in 2001 by brothers Zuber and Mohsin Issa. It operates convenience stores and quick-service restaurants in partnership with global brands like ESSO, BP, Shell, Carrefour, Louis Delhaize, SPAR, Starbucks, Burger King, KFC, Greggs and Subway.

The Kroger Co. serves 9 million customers every day in 2,793 retail food stores under a variety of local banner names throughout 35 states and the District of Columbia. Some of those names include Ralphs, Smith’s, Fry’s, Fred Meyer, Food 4 Less and Kroger.

The Kroger Co.’s stock price closed at $29.07 per share on Tuesday, Feb. 6, down from $32.47 per share one year ago.

— Nellie Day

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