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CHARLOTTE — The Kroger Co., already the country’s largest traditional supermarket operator, is expanding its reach in key southeastern and mid-Atlantic states by snapping up the regional Harris Teeter Supermarkets Inc.
The $2.44 billion cash deal reflects Kroger’s growth plans at a time when supermarkets are fighting competition from big-box retailers such as Target Corp. and Wal-Mart Stores Inc., as well as drugstores and dollar stores that are expanding their food sections.
Harris Teeter has 212 stores in eight states, including Delaware, Florida, Maryland, and Washington, D.C., where Kroger does not have a presence. Almost two-thirds of Harris Teeter's stores are in North Carolina.
The combined company will operate 2,631 supermarkets and employ 368,300 workers in 34 states.
Harris Teeter operates stores in the Carolinas, Virginia, Maryland, Tennessee, Delaware, Florida, Georgia, and the District of Columbia.
Kroger, based in Cincinnati, said Harris Teeter will maintain its headquarters in Matthews, N.C., and continue to operate its stores under the Harris Teeter name.
But the company also said it expects to generate $40 million to $50 million worth of annual savings by combining the firms.
The deal — approved unanimously by both boards Monday — will add Harris Teeter’s $4.5 billion in annual sales to Kroger’s total, and pushing Kroger past the $100 billion revenue mark.
“Harris Teeter has a long track record of creating shareholder value, and this merger is the culmination of those efforts over many years,” Harris Teeter Chairman and CEO Thomas Dickson said in a statement.
Mr. Dickson said Harris Teeter will maintain much of its identity.
“We are excited about becoming part of the Kroger Co., one of the best food retailers in the U.S., while maintaining the Harris Teeter banner, our management teams, our new store growth plan, our distribution and manufacturing facilities in North Carolina, as well as our headquarters in Matthews,” he said.
Kroger Chief Financial Officer Mike Schlotman told investors and analysts that Harris Teeter has a good brand name, and there’s no reason to change it to Kroger.
Mr. Schlotman said it’s too soon to know when the deal might close. A vote by Harris Teeter shareholders and regulatory approval will be required.
As part of the agreement, Kroger will buy all outstanding shares of Harris Teeter stock for $49.38. Kroger officials say that is 33.7 percent higher than the stock was selling on Jan. 18, when media reports first surfaced about the possible sale.
It’s about 2 percent higher than the stock’s close Monday at $48.52 a share. It rose 74 cents Tuesday to close at $49.26.
Kroger Co. stock rose 96 cents, or 2.7 percent, to $37.15.
Kroger will finance the deal with debt, the company said.
The company operates supermarkets under names including its flagship Kroger, as well as City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry’s, King Soopers, QFC, Ralphs, and Smith’s.
The Associated Press contributed to this report.