On Monday, Kroger Co (NYSE: KR) announced that it would sell its convenience store business to EG Group, which is a British convenience store operator, in a $2.15 billion deal.
Currently, Kroger’s convenience stores includes 66 franchise operations with 11,000 associates, and operates stores in 18 states under the names of Tom Thumb, Kwik Shop and Loaf 'N Jug. In 2016, the convenience store business generated revenue of $4 billion, and sold fuel of 1.2 billion gallons in total, according to the company.
Since last October, the company has been thinking about the sale of its convenience store business, saying that it would explore strategic alternatives for the business, amid the tougher situation of competing with its rivals such as Walmart and Amazon. In the deal, more than 700 stores and 11,000 employees will be affected, but the supermarket fuel centers and Turkey Hill Dairy will not be affected by the sale, according to the company.
The deal is expected to close in April, which is the fiscal first quarter of Kroger. The company said that it planned to use the money from the deal to repurchase shares and lower debt. British EG Group said that it would establish a North American headquarters in Cincinnati, and the stores would be operated under their established names.