British convenience store operator EG Group is buying Kroger's convenience store unit for $2.15 billion as it expands into the U.S.
Kroger — the parent company of Hutchinson-based Dillons — and other grocery store operators are facing tougher competition from companies including Walmart and Amazon. Kroger, based in Cincinnati, has been considering a sale of its convenience store operations since October.
"As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business,” Mike Schlotman, Kroger's executive vice president and chief financial officer, said in a statement.
Kroger operates 783 convenience stores in 18 states, including more than 130 Kwik Shops in Kansas, Nebraska, Iowa, Tennessee and Mississippi. Kwik Shop was founded in Hutchinson in 1960 by Dick Dillon as a division of Dillon Stores.
Kroger also operates convenience stores Turkey Hill, Loaf 'N Jug, Tom Thumb and Quik Stop. Its convenience store business generated revenue of $4 billion in 2016.
EG Group expects to close the purchase this quarter. The company will base its North American headquarters in Cincinnati.
"Our business model is simple but effective — EG Group is creating a stronger relationship between consumers and leading retail brands they want to access,” said Zuber Issa, EG Group Founder and co-CEO, in a news release.
Kroger is one of the world's largest food retailers, with fiscal 2016 sales of $115.3 billion. It plans to use proceeds from the sale to buy back stock and pay down debt.
Tom Shine, KMUW's director of news and public affairs, contributed to this report.