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Kroger to buy Home Chef meal kit company

Home Chef would become a wholly owned Kroger subsidiary and make its meal kits available in Kroger stores across the country and online.
A Home Chef meal kit. (Photo: Provided)

Kroger Co. on Wednesday announced it has reached an agreement to acquire Chicago-based meal kit company, Home Chef, in a deal that could total $700 million.

The Cincinnati-based grocery giant would pay an initial purchase price of $200 million and up to an additional $500 million in "earnout" payments to Home Chef for meeting certain sales and other performance goals.

The deal is pending, subject to regulatory approval.

Home Chef — the country's largest private meal kit company by sales — would become a wholly owned Kroger subsidiary and make its meal kits available in Kroger stores across the country and online.

In addition, Home Chef will continue to offer its existing subscription and home delivery service.

Home Chef’s in-store offerings would complement Kroger’s Prep+Pared meal kits already available in more than 525 Kroger stores.

“This merger will introduce Kroger’s 60 million shoppers to Home Chef, enhance our ship-to-home and subscription capabilities, and contribute to Restock Kroger,'' said Yael Cosset, Kroger’s chief digital officer.

Credit: TEGNA
 (Photo: Kroger)

Cosset was referring to Kroger's own home delivery service being tested in select markets as well as its new Restock Kroger program designed to adjust product assortments in individual stores based on customer demand.

Kroger said the Home Chef acquisition would not affect on 2018 earnings. Shares of Kroger closed Wednesday at $24.57, down 13 cents.

The Home Chef announcement comes on the heels of a new partnership announced earlier this month with U.K.-based Ocado in which Kroger hopes to leverage Ocado's advanced digital and robotic capabilities to enhance warehouse automation.

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