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Kroger said yesterday that it will sell its convenience store business to UK-based EG Group - which operates some 2,600 stores in six European markets, but has had no US presence until now - for $2.15 billion.

According to MarketWatch, the operation being acquired includes “convenience stores in 18 states under names including Kwik Shop, Loaf 'N Jug and Tom Thumb. The business includes 66 franchise operations with 11,000 associates. The business generated $4 billion in revenue in 2016 and sold 1.2 billion gallons of fuel.”

CNBC reports that “Kroger said it plans to use proceeds from the sale to buy back shares and lower debt. The sale is part of Cincinnati-based Kroger's ‘Re-stock’ plan that aims to revamp its nearly 2,800 brick-and-mortar supermarkets, cut prices and boost in-store technology. Kroger is also investing in online channels amid stiff competition from chief rival Walmart, discounters Lidl and Aldi, and Whole Foods, which is owned by Amazon.”

The MarketWatch story says that “EG Group will establish a North American headquarters in Cincinnati and continue to operate stores under their established names.”
KC's View:
The deal is likely to close within the next two months. I know this is unlikely, but wouldn’t it be interesting if EG announced two weeks after the deal closes that it has sold all those stores to Amazon for, say, $2.75 billion. It would sort of be like flipping a house, and I’m guessing that Kroger would not have wanted to sell the stores directly to Amazon. And, it would give Amazon a lot of desirable real estate from which it can grow its bricks-and-mortar operations.

I’m not saying this will happen. But I guess I am wondering if it makes sense, if it even is possible, for Kroger to insert a kind of no-trade clause into the sale agreement.