5 facts about the Kroger deal to buy Pick ‘n Save

The transaction price is $3.60/share in cash or about $800 million including debt (7x EBITDA), represents a 65% premium to Roundy’s stock price prior to announcement, and will be financed with debt.

The retailer will also refinance Roundy’s existing debt of $646 million and invest the cost savings of about $40 million into growth efforts over time. These are served under the Pick ‘n Save, Copps and Metro Market banners.

Last year, Roundy’s exited the Minneapolis-St.

No store closings are planned. On Wednesday, Roundy’s said it lost $8.8 million in the quarter through October 3, as sales declined to $971.8 million from $973.8 million a year earlier.

BofA Merrill Lynch and Sagent Advisors are financial advisers to Kroger, while J.P. Morgan Securities is advising Roundy’s. “This is a great win for our customers, communities, employees and our shareholders”, he said in the release. Kroger’s shares were up slightly at $37.34. The company lost more than $300 million in 2014.

Supermarket giant Kroger’s (NYSE:KR) agreement to buy Roundy’s (NYSE:RNDY) would expand Kroger’s reach in the Midwest, giving it a footprint in Milwaukee, Madison, northern Wisconsin and stores in Chicago.

Roundy’s also operates two distribution centers in Mazomanie and Oconomowoc. Bob Mariano, chief executive officer of Roundy’s, Inc., will remain with the newly merged company. But Roundy’s has struggled to grow in the competitive supermarket industry.

The deal is slated to close before the end of this year.

It will operate 2,700 supermarkets and employ more than 422,000 people, according to a Milwaukee Wisconsin Journal Sentinel. Will Sendik’s Food Markets Inc. – the Whitefish Bay based grocer – be able to hold its ground now that it boasts the highest number of locally owned grocery stores in the area?