Kroger (KR) is about to expand its reach to include three new U.S. states.
The supermarket giant announced on Tuesday that it will pay $2.5 billion to purchase Harris Teeter Supermarkets (HTSI). Under the deal, which has been approved by both companies’ boards, Kroger will acquire Harris Teeter shares for a 2% premium over their Monday closing price, USA TODAY notes.
Kroger will assume $100 million in Harris Teeter’s debt under the deal, which will be financed with debt of its own.
After the purchase, Kroger will operate 2,631 supermarkets in 34 states — up from a current 31 — and the District of Columbia. Harris Teeter will become a Kroger subsidiary.
The acquisition will produce cost savings of between $40 million and $50 million during the next four years, Kroger estimates.
News of the acquisition sent Kroger shares up more than 2% in Tuesday morning trading, while Harris Teeter climbed more than 1%.