Kroger to Acquire Harris Teeter for $2.5 Billion

harris teeterThe Kroger Co. reached a deal yesterday to acquire regional grocer Harris Teeter Supermarkets Inc. in a $2.5 billion deal, the latest in a string of grocery industry consolidations.

The deal, approved by the boards of both companies, is expected to boost Kroger’s presence in the U.S. southeast. Competitors there include Publix and Wal-Mart Stores Inc., the largest U.S. food retailer. However, convenience store chains such as Wawa, RaceTrac and Thorntons are starting to make noise with expanding retail operations in the Southeast, particularly Florida.

Cincinnati-based Kroger, the largest mainstream U.S. grocer, will also get a bigger presence in the mid-Atlantic region, slightly more upscale stores that do a strong business in fresh food and access to fast-growing markets.

As the supermarket industry has consolidated, chains like Harris Teeter, based in Matthews, North Carolina, have struggled to maintain market share against rivals such as Wal-Mart, Costco and Whole Foods.

The combined business will operate 2,631 supermarkets in 34 states and the District of Columbia, with over 368,300 employees. Harris Teeter has a non-union workforce, while Kroger largely operates with unionized staff, according to Reuters.

Analysts also predicted that Tesco’s Fresh & Easy chain could be the next supermarket business to be sold.

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