EG Group’s $2.15 Billion Acquisition of Kroger convenience stores

Goldman Sachs & Co. LLC is acting as exclusive financial advisor to Kroger and Weil, Gotshal & Manges LLP is acting as legal advisor to Kroger. Morgan Stanley, Bank of America Merrill Lynch and Barclays are acting as financial advisors to EG Group. Allen & Overy is acting as legal advisor to EG Group. Paul Hastings LLP advised UK-based EG Group on real estate matters.

The Kroger Co. (NYSE: KR) and EG Group, a privately-held petrol forecourt convenience store retailer based in Blackburn, Lancashire, United Kingdom, finalized a definitive agreement for the sale of Kroger’s convenience store business unit to EG Group for $2.15 billion. The companies expect to close the transaction during the first quarter of Kroger’s fiscal year.

As part of the agreement, EG Group will establish their North American headquarters in Cincinnati, Ohio and continue to operate stores under their established banner names.

Kroger announced in October 2017 its intention to explore strategic alternatives for its convenience store business, including a potential sale, in conjunction with Restock Kroger.

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.

The transaction is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The company expects the transaction to close quickly as EG Group has no U.S. presence today.

The Paul Hastings team was led by Real Estate partner Robert Keane (Picture) and Corporate partner Robert Miller and included associates Myles Blau and Jamie Curry.

 

Involved fees earner: Robert Keane Jr. – Paul Hastings; Robert Miller – Paul Hastings; Myles Blau – Paul Hastings; Jamie Suzanne Curry – Paul Hastings;

Law Firms: Paul Hastings;

Clients: EG Group – Euro Garages;

 

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Author: Ambrogio Visconti