Kroger Fielding $2B Offer for C-Stores: Report

Casey’s reported bid could fuel ‘Restock’ program, support tech initiatives

Kroger may have found a buyer for its convenience store division.

Published reports late last week said Iowa-based convenience store operator Casey's General Stores Inc. has submitted an initial bid for Kroger's nearly 800-unit convenience store network under pressure from an activist investors group, according to a CNBC report citing sources familiar with the situation.

The offer is reported to be valued at $2 billion.

Kroger in October said it would explore strategic alternatives for its c-store business, including a potential sale following a review of “assets that are potentially of more value outside of the company than as part of Kroger.” That announcement came as Kroger detailed a new strategic initiative known as Restock program, designed to reinvent its supermarket store base and invest behind and technology and service.

Proceeds from a c-store deal could presumably fuel the program. The deal comes as Kroger is reportedly eyeing an acquisition of its own—the online bulk retailer Boxed.

Neither Kroger nor Casey’s had remarked on the CNBC story.

Kroger operates nearly 800 convenience stores in 18 states under the Turkey Hill Minit Markets, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quick Stop banners, generating around $4 billion in annual revenues, including $1.4 billion in non-fuel sales. Officials in October said the division had generated 62 consecutive quarters of same-store sales growth.

Casey’s bid comes amid pressure from activist shareholders who earlier this month published an open letter to the company’s other shareholders arguing Casey’s was “significantly undervalued.” It urged the board to “immediately engage a financial adviser to explore all strategic alternatives, including a potential sale, merger or similar transaction in order to maximize shareholder value.”

The dissident group, comprising JCP Investment Management LLC, BLR Partners LP and Joshua E. Schechter, together own about $45 million worth of the retailer’s stock.

Casey's owns and operates more than 2,000 c-stores in 15 states.


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