The Kroger Co. announced on Friday that it has completed the sale of its convenience store business unit to U.K.-based EG Group for $2.15 billion.
After tax proceeds total $1.7 billlion, $1.2 billion of which will be used to fund an accelerated share repurchase program.
"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," says Mike Schlotman, Kroger's executive vice president and CFO. "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."
As a part of Restock Kroger, the company announced in late 2017 its intention to explore strategic alternatives for its c-store business, including a potential sale. In February, Kroger and EG Group announced a definitive agreement for the sale of Kroger's c-store business unit.
Included in the sale were 762 c-stores, including 66 franchise operations, operating in 18 states and employing 11,000 associates under the the banner names of: 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 its North America headquarters in Cincinnati, Ohio and continue to operate stores under their established banner names.
Kroger will use the balance after the tax proceeds to lower its net total dept to adjusted EBITDA ration.
"Kroger is committed to creating shareholder value," Schlotman says. "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."