EG Group and Kroger announce definitive agreement for purchase of Kroger’s convenience store business in the USA
EG Group announces petrol forecourt convenience retail expansion plans in United States by entering into a definitive agreement with The Kroger Co. (NYSE: KR) for the sale of their 762 site network for a consideration of $2.15 billion.
Kroger’s convenience store business operates in 18 states and 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. As part of the transaction, EG Group will establish their North American headquarters in Cincinnati, Ohio and continue to operate stores under their established banner names.
EG Group is a leading petrol forecourt convenience operator in Europe who currently owns and manages circa 2,600 sites across the United Kingdom, France, The Netherlands, Belgium, Luxembourg and Italy, employing over 12,500 colleagues across leading retail brands such as ESSO, BP, Shell, Carrefour, Louis Delhaize, SPAR, Starbucks, Burger King, KFC, Greggs, Pomme de Pain and Subway.
As announced in late 2017, the business secured approximately 1,000 petrol forecourt assets from Esso in Germany which will be transferred and integrated into the existing network in Q4, 2018. With the inclusion of the Kroger assets, EG Group will own and operate circa 4,400 sites across Europe and the US. Mohsin Issa, EG Group Founder and co-CEO expressed: “This is an exciting time for EG Group, the entry into the US market presents a fantastic opportunity to deliver a successful retail offer to consumers across the various states. We have had much success across Europe and we firmly believe the Kroger assets present a fantastic foundation to overlay our retail experience and know-how in the US. We are committed to investing in the Kroger network, partnering with leading retail brands and working with the exceptional management team and associates transferring across to deliver a comprehensive retail offer. Our business model is simple but effective – EG Group is creating a stronger relationship between consumers and leading retail brands they want to access. In the US we aim to create a retail environment which delivers convenience, provides value and serves as a retail destination offering excellent welfare to motorists who live and work near our petrol forecourt convenience retail stores," added Zuber Issa, EG Group Founder and co-CEO.
Mike Schlotman, Kroger’s executive vice president and chief financial officer commented: “One of the most important considerations in our decision-making process was to enable 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 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.
This transaction 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.”
North America is an important strategic market for the EG Group and it has previously evaluated a number of potential acquisitions, where it believes its unique and innovative business model would be successful. The acquisition of Kroger’s convenience store business thus provides access to the world’s largest fuel convenience market to complement the EG Group’s European platform.
The combination with EG Group’s existing operations creates significant scale, which drives meaningful purchasing power for both fuel and non-fuel retail operations.
The transaction is still subject to regulatory approval.