The deal has been approved by both companies' boards, but remains subject to Harris Teeter shareholder approval. Harris Teeter announced in February that it was exploring strategic alternatives, including a possible sale.
Harris Teeter owns 212 stores in southeast and mid-Atlantic states, including North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia. It had revenues of approximately $4.5 billion for fiscal year 2012.
"We are excited to welcome Harris Teeter to the Kroger family," said David B. Dillon, Kroger's Chairman and Chief Executive Officer. "Harris Teeter is an exceptional company with a great brand, friendly and talented associates, and attractive store formats in vibrant markets run by a first-class management team."
Kroger said it will finance the transaction with debt. Kroger also intends to assume Harris Teeter's outstanding debt of approximately $100 million.
In a conference call with investors, J. Michael Schlotman, who is Kroger's chief financial officer, said the deal marks Kroger's entry into several attractive, high-growth markets such as Charlotte, N.C., and Washington D.C.
Of Harris Teeter's 212 stores, 138 are located in North Carolina, with 55 of those in the Charlotte area. Another 55 stores are located in the Washington D.C., area, Schlotman said.
After the deal closes, Harris Teeter will become a Kroger subsidiary and will continue to be led by members of its current senior management. There are no plans to close stores and the division will remain based in Matthews, N.C.
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