Harris Teeter Supermarkets, Inc.’s operating subsidiary, Harris Teeter Inc., is geared to expand its operations in the Charleston, SC region. As part of this strategy, it has inked an agreement with Greenbax Enterprises, Inc. (“Piggly Wiggly”) to buy six store locations and one future store location in the area.
Piggly Wiggly is a family-owned retail company with more than 3,000 employees and 100 stores throughout South Carolina and coastal Georgia. Based in Charleston, SC, it sells variety of goods like general grocery, meat, seafood, produce, deli, bakery, floral and pharmacy.
After suffering declines in market share and comps for several months, Piggly Wiggly decided to trim its structure. It announced its intention to sell 29 of its locations. HTSI will take over three stores in Charleston; two stores in Mount Pleasant, SC; one in the Newton Farms location on Kiawah Island, SC; and one store location under construction in Isle of Palms, SC. The balance 22 stores will be sold to supermarket chain, BI-LO LLC.
However, both the bidders have signed agreements to sell their assets to larger chains. Harris Teeter, carrying a Zacks Rank #4 (Sell), has signed a divestiture agreement with The Kroger Co. (KR - Free Report) . Per the contract, Kroger will acquire all the shares of the regional grocer for $2.44 billion in cash.
Kroger will pay $49.38 for each Harris Teeter share and will assume the latter’s outstanding debt of about $100 million. Again, Publix Super Markets, Inc is expected to buy seven BI-LO-branded stores in North and South Carolina.
The grocery supermarket sector in the U.S. seems to be undergoing a reshuffle as many large supermarkets are changing hands. Recently, in 2013, Supervalu Inc. (SVU - Free Report) and Safeway Inc. trimmed down their operations by selling off some of the supermarkets.
The declining discretionary spending owing to the sluggish economic growth in the U.S. has increased the competition for these supermarket chains. Therefore, the large grocery chains are buying parts or whole of smaller supermarket chains to reap the benefit of location and price.