CINCINNATI, Ohio: Kroger will acquire the regional supermarket chain Giant Eagle in a US$1.65 billion deal, expanding its footprint across the U.S. Midwest and Mid-Atlantic as competition among grocery retailers intensifies.

Announced on July 1, the acquisition is Kroger's first major deal under CEO Greg Foran and its first significant purchase since its proposed $25 billion merger with Albertsons collapsed in 2024.

Family-owned Giant Eagle generates about $9 billion in annual sales and operates around 197 supermarkets and 11 standalone pharmacies across northern Ohio, western Pennsylvania, West Virginia, Maryland and Indiana.

"We evaluated the opportunity carefully, and the strategic fit is clear. Giant Eagle expands our reach into attractive adjacent markets," Foran said.

The deal is valued at $1.65 billion and includes $1.25 billion in cash as well as the assumption of about $400 million in Giant Eagle's outstanding liabilities.

Shares of Cincinnati-based Kroger were down about two percent in premarket trading.

The acquisition comes as Kroger faces intense competition from Walmart, Amazon and other grocery retailers while consumers grappling with higher living costs increasingly seek lower-priced essentials.

Kroger has previously said it plans to reduce prices on thousands of products, with the cuts funded in part by direct imports and greater use of technology.

"This acquisition comes at a challenging time for traditional grocers," Consumer Edge analyst Michael Gunther said, noting that specialty chains such as Trader Joe's have been outperforming, while discount retailers including Aldi continue attracting price-conscious shoppers.

Gunther added that Giant Eagle's customer base tends to consist of older shoppers who have been more resilient in the current economic environment.

The transaction also reflects strong merger activity across the consumer sector, where food, beverage, personal care, pet products, and health companies have increasingly turned to acquisitions to navigate inflation, shifting consumer preferences, and heightened competition.

Kroger expects the acquisition to close in 2027 and said it should contribute to adjusted profit beginning in the second full year after completion.

The company also said it intends to continue paying its dividend and maintain its $2 billion share repurchase program while keeping its target net total debt-to-adjusted EBITDA ratio between 2.3 and 2.5.

RBC Capital Markets is serving as Kroger's financial adviser, while Wells Fargo is advising Giant Eagle.