What will the Roundy’s acquisition mean for Kroger and Mariano’s?
Kroger, the largest operator of supermarkets in the U.S., is about to get bigger. The company announced a definitive agreement to acquire Roundy’s in a transaction valued at $800 million, including debt. The equity value of the deal is $177.8 million, valued on Roundy’s outstanding shares as of August 3rd, 2015.
Rodney McMullen, chairman and CEO of Kroger, said the company would use its strong financial position to help Roundy’s compete more effectively in the chain’s home market of Wisconsin while pursuing a growth strategy with the 34-store Mariano chain Roundy’s runs in Chicagoland. Roundy’s, which overall operates 151 grocery stores and 101 pharmacies, generates just under two-thirds of its sales in Wisconsin.
"We admire what Bob Mariano has done with the Mariano’s banner in Chicago, where he has created an urban format that is resonating with customers and we expect to apply Roundy’s experience to our stores in urban areas around the country," said Mr. McMullen in a statement.
In an interview with the Chicago Tribune, Mr. Mariano said the chain named after him would not suffer as a result of being acquired by Kroger.
"I’m still on watch, I’m not going anywhere and I’m not going to let that happen," Mr. Mariano told the Trib. "Kroger sees this as a merger. They want to take the best of what we do and add the best of what they do. Our view is that we’re not going to fiddle with things that are critical to our success."
- Kroger and Roundy’s Announce Definitive Merger Agreement – The Kroger Co.
- Kroger takeover won’t hurt quality at Mariano’s stores, Bob Mariano says – Chicago Tribune (tiered sub.)
- Kroger to buy Roundy’s to expand in Midwest – Reuters
What will the merger of Kroger and Roundy’s mean for each company? Do you see Mariano’s as the big prize in the deal?