Euro Garages enters US market with $2bn acquisition
EG Group has agreed a $2.15bn deal to buy 762 convenience stores from The Kroger Co, seeing the Blackburn company break into the American market.
The purchase covers sites in 18 states and includes 66 franchise operations, totaling more than $4bn in revenue and accounting for 1.2bn gallons of fuel sold in 2016.EG will establish a North American headquarters in Kroger's home city of Cincinnati, Ohio, where it will oversee stores under the brand names Turkey Hill, Loaf 'N Jug, Kwik Shop, Tom Thumb and Quik Stop.
The Blackburn-based group owns and manages 2,600 petrol forecourts in UK and Europe, employing more than 12,500 employees for brands such as ESSO, BP, Shell, Carrefour, Louis Delhaize, SPAR, Starbucks, Burger King, KFC, Greggs, Pomme de Pain and Subway. A further 1,000 sites in Germany will be added later this year as part of EG's purchase of forecourt assets from Esso in Germany.
Mohsin Issa, EG group founder and co-CEO said: “The entry into the US market presents a fantastic opportunity to deliver a successful retail offer to consumers across the various states.
"We have had much success across Europe and we firmly believe the Kroger assets present a fantastic foundation to overlay our retail experience and know-how in the US. We are committed to investing in the Kroger network, partnering with leading retail brands and working with the exceptional management team and associates transferring across to deliver a comprehensive retail offer.”
Zuber Issa, EG group founder and co-CEO, added: “Our business model is simple but effective. In the US we aim to create a retail environment which delivers convenience, provides value and serves as a retail destination offering excellent welfare to motorists who live and work near our petrol forecourt convenience retail stores.”
Mike Schlotman, Kroger’s executive vice president and chief financial officer commented: “One of the most important considerations in our decision-making process was to enable continued operations to ensure minimal disruption to our associates. We are very pleased the EG Group plans to establish their North American headquarters in Cincinnati. EG Group is a recognized international petrol forecourt convenience operator and they have a commercial model which clearly looks to enhance the consumer offer by working with leading retail brands customers know and trust."
North America is an important strategic market for the EG Group and it has previously evaluated a number of potential acquisitions, where it believes its unique and innovative business model would be successful. The acquisition of Kroger’s convenience store business thus provides access to the world’s largest fuel convenience market to complement the EG Group’s European platform.
The transaction is still subject to regulatory approval. Bank of America Merrill Lynch, Morgan Stanley and Barclays are acting as financial advisors to EG Group. Allen & Overy is acting as legal advisor to EG Group.