Kroger has agreed to acquire supermarket chain Giant Eagle for $1.65 billion in cash, while also assuming about $400 million of the target's outstanding liabilities. The deal comes as Kroger's share price has pulled back, with a 90-day return down 19.85% and a 30-day return down 8.37%, even as the company announced the acquisition, continued buybacks, and a higher dividend. A popular fair value estimate places Kroger at $70.71 per share, compared with a last close of $58.25, suggesting the stock is undervalued. However, Kroger's current price-to-earnings ratio of 34.1 times sits above the US Consumer Retailing industry average of 18.5 times and the peer average of 28.4 times, raising questions about valuation risk.
Kroger CompanyKroger acquires Giant Eagle for $1.65B cash, assumes $400M liabilities; stock is down but buybacks and dividend continue; valuation mixed.
Giant Eagle is acquired by Kroger for $1.65B cash plus assumed liabilities, a positive exit for its owners.