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Kroger and Harris Teeter Supermarkets Announce a Definitive Merger Agreement for 2.5 Billion Dollars

Kroger and Harris Teeter Supermarkets Announce a Definitive Merger Agreement for 2.5 Billion Dollars

Cincinnati, OH- Kroger and Harris Teeter have entered into a definitive merger agreement where Kroger will purchase all outstanding shares of Harris Teeter for $49.38 per share in cash, a transaction valued at approximately $2.5 billion. Terms of the agreement were approved by the Boards of both retailers. The transaction price represents a premium of 33.7% to the Harris Teeter closing share price on January 18, 2013, according to a press release. Harris Teeter 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. They share our customer-centric approach to everything we do – from store format and merchandising to innovative loyalty programs. This is a financially and strategically compelling transaction and a unique opportunity for our shareholders and associates. We look forward to bringing together the best of Kroger and Harris Teeterwhile continuing to operate and grow the Harris Teeter brands. Together, we can continue to deepen our connections with customers across all of our markets."

Harris Teeter will continue to operate its stores as a subsidiary of Kroger. Key members of Harris Teeter's senior management team will continue to lead the stores. There are no plans to close stores at this time

Thomas W. Dickson, Chairman of the Board and Chief Executive Officer of Harris Teeter stated, "Harris Teeter has a long track record of creating shareholder value and this merger is the culmination of those efforts over many years. We are excited about becoming part of The Kroger Co., one of the best food retailers in the U.S. while maintaining the Harris Teeter banner, our management teams, our new store growth plan, our distribution and manufacturing facilities in North Carolina as well as our headquarters in Matthews, NC. As part of Kroger, Harris Teeter will be well equipped to continue to provide our customers outstanding quality and customer service as well as excellent value in an increasingly competitive market."

Kroger intends to assume Harris Teeter's outstanding debt of an estimated $100 million and to continue its quarterly dividend and share repurchase program while managing free cash flow to reduce the leverage taken on from this merger. Kroger expects to achieve annual cost savings of approximately $40 to $50 million over the next three to four years, with a bulk of those savings expected to come from the benefits of Kroger's scale.

Kroger and Harris Teeter