Kroger to Buy Harris Teeter for $2.5 Billion in Cash

Customer shops at a Kroger supermarket in Peoria, Ill.
Daniel Acker | Bloomberg | Getty Images
Customer shops at a Kroger supermarket in Peoria, Ill.

Grocery store operator Kroger said it will acquire Harris Teeter Supermarkets in a deal valued at $2.5 billion, including debt, to expand in the Southeast and mid-Atlantic states.

Kroger offered $49.38 per share, representing a premium of about 2 percent to Harris Teeter's Monday close.

The price is 33.7 percent higher than Harris Teeter's closing share price on Jan. 18, the day of the first media report that Harris Teeter was evaluating strategic alternatives.

"This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates," Kroger Chairman and CEO David Dillon said in a statement.

Both boards have approved the buyout.

Harris Teeter has 212 stores in the Southeast and mid-Atlantic. Cincinnati-based Kroger operates 2,419 stores in 31 states. The deal will add three states to its retail operation. In addition to its flagship brand of supermarkets, it also owns Ralphs, Fry's and Food 4 Less.

After the deal closes, Harris Teeter will become a Kroger subsidiary and will continue to be led by members of its current senior management. There are no plans to close stores and the company will remain based in Matthews, N.C.

—By, with wires.