Retail News Breaks
Kroger acquisition to strengthen online platform
July 2nd, 2014
CINCINNATI – Kroger Co. announced an agreement to buy Vitacost.com Inc., an online seller of vitamins, natural food, and health and beauty aids, to bolster its online retailing presence.
Boca Raton, Fla.-based Vitacost.com has 2.3 million customers and $382 million in annual sales.
Kroger, the nation’s largest supermarket chain, said Vitacost.com is attractive because of its technology, which Kroger intends to use as it builds out its own online retailing platform.
"We are delighted to welcome Vitacost.com to the Kroger family," said Rodney McMullen, the supermarket chain’s chief executive officer. "This merger is in line with our growth strategy to enter new markets and new channels, and — along with Harris Teeter’s online-order-and-pick-up service — accelerates our efforts to provide customers with even more ways to shop."
Kroger is paying $8 a share for Vitacost.com, a 27% premium to Vitacost.com’s closing price on July 1 and 51% above where Vitacost.com shares were trading in February, before one of the company’s shareholders publicly asked that Vitacost.com explore strategic alternatives.
The tender offer requires the approval of owners of a majority of Vitacost.com's shares outstanding. Kroger said holders of approximately 26.2% of those shares have agreed to support it so far.
On June 19 Kroger posted a 4.2% increase in profits in its fiscal first quarter on a 9.9% jump in sales. Kroger’s same-store sales, excluding fuel, rose 4.6% in the three months through May 24 compared to the year-earlier period.
Kroger's first quarter results include sales from the newly added Harris Teeter stores, which Kroger acquired in January for $2.5 billion. The deal added 227 stores in the Southeast and Mid-Atlantic regions.
Kroger operates more than 2,640 supermarkets in 34 states.
More Retail News Breaks >>