Kroger Co. is selling its convenience store business unit to EG Group, a privately held convenience store retailer based in the United Kingdom, the companies announced Tuesday.
The deal is expected to be closed during the first quarter of Kroger’s fiscal year.
Kroger is the parent company of Turkey Hill Dairy, which is not included in the sale.
As part of the agreement, EG Group will establish its North American headquarters in Cincinnati, Ohio and will continue to operate stores under their established brand names.
Kroger announced its intention to pursue a potential sale of its convenience store business in October of 2017.
“Our convenience store business has been a part of our company for many years. We want to thank our management team and associates for their enduring commitment to our customers, and for the contributions they have made to build our supermarket fuel business,” said Mike Schlotman, Kroger’s executive vice president and chief financial officer. “As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business.”
“One of the most important considerations in our decision-making process was continued operations to ensure minimal disruption to our associates. We are very pleased the EG Group plans to establish their North American headquarters in Cincinnati. EG Group is also a recognized international petrol forecourt convenience operator and they have a commercial model which clearly looks to enhance the consumer offer by working with leading retail brands customers know and trust,” said Mr. Schlotman. “This is good for our associates across the country and for our headquarter city of Cincinnati. Throughout the process we were impressed with the EG Group’s professionalism, investment commitment and more importantly their understanding of the US convenience retail market. We now look forward to working with them closely to ensure a smooth transition for associates.”
Kroger plans to use net proceeds from the sale to repurchase shares and to lower its net total debt to adjusted EBITDA ratio.
Kroger’s convenience store business operates in 18 states. It includes 66 franchise operations. The stores employ 11,000 associates and operate under the following banner names: Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop. Kroger’s convenience store business generated revenue of $4 billion, including selling 1.2 billion gallons of fuel, in 2016.
Kroger’s supermarket fuel centers and its Turkey Hill Dairy are not included in the sale.