Kroger Completes C-Store Deal, Fueling $1.2B Stock Spree

Retailer will see $1.7B in after-tax proceeds

The Kroger Co. has completed the sale of its convenience store business unit to the U.K.'s EG Group for $2.15 billion.

"Throughout the sales process, we have been impressed with EG Group's professionalism, commitment to people and understanding of the U.S. convenience retail market," Kroger CFO Mike Schlotman said in a statement. "I can't stress enough how important to our success Kroger's convenience store management and associates have been, and we want to thank them for all of their contributions to our customers and our company."

Kroger announced in October its intention to explore strategic alternatives for its c-store business, including a potential sale, in conjunction with Restock Kroger, a plan “to redefine the food and grocery customer experience in America.” In February, Kroger and EG Group announced a definitive agreement for the sale of Kroger's convenience store business unit to EG Group.

Included in the sale were 762 convenience stores, including 66 franchise operations, operating in 18 states and employing 11,000 associates under the banners Turkey Hill, Loaf 'N Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger's supermarket fuel centers and its Turkey Hill Dairy were not included in the sale. EG Group will establish their North American headquarters in Cincinnati and continue to operate stores under their established banner names.

Share Repurchase

With the sale of the c-store unit, Kroger will see after-tax proceeds totaling $1.7 billion, the company said, and $1.2 billion of the proceeds will be used to fund an accelerated share repurchase program.

Kroger entered into an ASR agreement Friday with Goldman Sachs, pursuant to which on April 24, 2018, Kroger will pay $1.2 billion to Goldman, which will make an initial delivery to Kroger of approximately 36.1 million Kroger common shares. The $1.2 billion ASR is an additional repurchase authorization approved by Kroger's board of directors, which is incremental to the $1 billion share repurchase program announced on March 15.

Kroger will use the balance of the after tax proceeds to lower its net total debt-to-adjusted-EBITDA ratio.

"Kroger is committed to creating shareholder value," Schlotman said. "We are returning a significant amount of capital to shareholders through a $1.2 billion accelerated share repurchase program authorized by our board of directors."

A version of this story published at WGB sister site CSP Daily News.



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