U.S. News

Kroger CEO Says Grocery Chain Isn't Weighing a Buyout


Kroger's chief executive told employees Friday that the nation's largest traditional grocery chain isn't considering a leveraged buyout.

"I want you to know neither management nor our board of directors has any interest in pursuing a leveraged buyout transaction," David B. Dillon, Kroger's chairman and CEO, said in a statement that was also released publicly.

The statement followed The Wall Street Journal's report Friday that private equity firms have been sizing up Kroger with the expectation that the company would soon explore a leveraged buyout that would take it private. The newspaper cited unnamed people familiar with the matter, and said it was unclear whether such expectations would play out.

Kroger cited a policy of not commenting on rumors and speculation, but released Dillon's message to employees late Friday afternoon.

"With the ready availability of significant capital in private equity funds and Kroger's attractiveness as a franchise, rumors and speculation are not surprising. Unfortunately, the kind of speculation contained in the article can be disruptive to our associates and to the conduct of our business," Dillon said.

"Our focus is on the execution of our business strategy, which is to serve our customers, and in that way to continue to grow Kroger as an independent public company and create value for our shareholders," he said.

At Thursday's closing price, Kroger had a market capitalization of $20.7 billion on the New York Stock Exchange. The stock market was closed Friday for Good Friday.

Kroger's profit rose 16% to $1.11 billion, or $1.54 per share, on $66.1 billion in revenue in fiscal 2006.

Kroger operates 2,468 supermarkets and multi-department stores in 31 states, under two dozen local banners that include Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's, Dillons, QFC and City Market.