Kroger Co., the largest operator of supermarkets in the U.S., is set to expand its fleet even further. The supermarket giant has agreed to buy Milwaukee-based Roundy’s Inc., extending its reach into one of the few states in which it doesn’t already compete. This will add 151 stores to Kroger’s already massive faction of 2,623 grocery stores nationwide.
The acquisition is valued at $800 million, including debt. However, the equity value of the deal is $177.8 million, based on Roundy’s outstanding shares as of August 3rd.
Rodney McMullen, chairman and CEO of Kroger, says the corporation will use its strong financial position to help Roundy’s compete more effectively within its home market of Wisconsin. Additionally, he adds, it will pursue a growth strategy with Roundy’s Chicago-based banner, Mariano’s.
“We admire what Bob Mariano has done with the Mariano’s banner in Chicago,” says McMullen. “[There,] he has created an urban format that is resonating with customers and we expect to apply Roundy’s experience to our stores in urban areas around the country.”
Mariano himself notes that his namesake chain will not suffer as a result of being acquired by Kroger. “I’m still on watch, I’m not going anywhere and I’m not going to let that happen,” he says. “Kroger sees this as a merger. They want to take the best of what we do and add the best of what they do. Our view is that we’re not going to fiddle with things that are critical to our success.”
