Kroger to buy grocer Giant Eagle in $1.65 billion deal as competition heats up

By Neil J Kanatt and Abigail Summerville

July 1 (Reuters) – U.S. grocer Kroger has reached a $1.65 billion deal to buy regional supermarket chain Giant Eagle, it said on Wednesday, strengthening its presence in the Midwest and the Mid-Atlantic region.

Its first transaction under CEO Greg Foran is also the company’s first major acquisition since its $25 billion merger with Albertsons fell apart in 2024.

Family-owned Giant Eagle generates about $9 billion in annual sales and operates 197 supermarkets and 11 standalone pharmacies across northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana.

‘STRATEGIC FIT IS CLEAR’

“We evaluated the opportunity carefully, and the strategic fit is clear. Giant Eagle expands our reach into attractive adjacent markets,” Foran said.

Shares of Cincinnati-based Kroger were down about 1% in morning trade on Wednesday.

The company has been battling intense competition from Walmart, Amazon and others as value-conscious consumers facing cost-of-living pressures seek cheaper essentials.

Giant Eagle did not run a formal auction and instead pursued a bilateral deal, engaging solely with Kroger, a source close to the matter said.

For Kroger, cost savings from the integration of Giant Eagle are seen as a pathway to price reductions, the source added.

Kroger has said it plans price cuts on thousands of items, funded partly by direct imports and better use of technology.

“This acquisition comes at a challenging time for traditional grocers,” Consumer Edge analyst Michael Gunther said, adding that specialty banners such as Trader Joe’s are outperforming and discounters including Aldi are pulling in trade-down traffic.

Giant Eagle’s customer base skews to a more resilient older shopper, Gunther added.

CONSUMER PREFERENCES SHIFTING

Dealmaking in the consumer sector, including food, beverages, personal care, pet products and health, has been robust as companies consolidate to weather inflationary pressures, shifting consumer preferences and competition.

The deal consists of $1.25 billion in cash and the assumption of about $400 million of Giant Eagle’s outstanding liabilities, Kroger said.

The retailer expects the deal to close in 2027 and add to adjusted profit in the second full year after completion.

Kroger expects to continue its dividend and $2 billion share repurchase program while maintaining a target ratio for net debt to adjusted core profit at 2.3 to 2.5.

RBC Capital Markets is the financial adviser to Kroger, while Wells Fargo is advising Giant Eagle.

(Reporting by Neil J Kanatt in Bengaluru and Abigail Summerville in New YorkEditing by Shreya Biswas, Sriraj Kalluvilan and David Goodman)