Kroger bites into meal kit market with Home Chef merger
CINCINNATI and CHICAGO — Kroger is looking redefine the grocery customer experience and revolutionize mealtime through a merger agreement with meal kit company Home Chef.
The initial transaction price is $200 million and future earn-out payments of up to $500 million over five years are contingent on achieving certain milestones, including significant growth of in-store and online meal kit sales. The deal is expected to close in the second quarter, following the satisfaction of customary closing conditions, including regulatory approval.
The pending merger comes on the heels of Home Chef's 150 percent growth in 2017, $250 million in revenue, and two profitable quarters.
"Customers want convenience, simplicity and a personalized food experience. Bringing Home Chef's innovative and exciting products and services to Kroger's customers will help make meal planning even easier and mealtime more delicious," said Yael Cosset, Kroger's chief digital officer. "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."
Chicago-based Home Chef employs approximately 1,000 employees and operates three distribution centers in Chicago, Atlanta and San Bernardino, Calif. Home Chef's distribution centers reach 98 percent of all continental U.S. households within a two-day delivery window.
After the deal closes, Home Chef will operate as a subsidiary of Kroger. It will maintain its e-commerce business on homechef.com and will assume responsibility for Kroger's meal solutions portfolio. The company will continue to operate its offices and facilities.
Following closing, Kroger will make Home Chef meal kits available to Kroger shoppers, both in stores and online.
Kroger expects the transaction to have no effect on 2018 earnings, and to be slightly accretive in 2019.
The initial transaction price is $200 million and future earn-out payments of up to $500 million over five years are contingent on achieving certain milestones, including significant growth of in-store and online meal kit sales. The deal is expected to close in the second quarter, following the satisfaction of customary closing conditions, including regulatory approval.
The pending merger comes on the heels of Home Chef's 150 percent growth in 2017, $250 million in revenue, and two profitable quarters.
"Customers want convenience, simplicity and a personalized food experience. Bringing Home Chef's innovative and exciting products and services to Kroger's customers will help make meal planning even easier and mealtime more delicious," said Yael Cosset, Kroger's chief digital officer. "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."
Chicago-based Home Chef employs approximately 1,000 employees and operates three distribution centers in Chicago, Atlanta and San Bernardino, Calif. Home Chef's distribution centers reach 98 percent of all continental U.S. households within a two-day delivery window.
After the deal closes, Home Chef will operate as a subsidiary of Kroger. It will maintain its e-commerce business on homechef.com and will assume responsibility for Kroger's meal solutions portfolio. The company will continue to operate its offices and facilities.
Following closing, Kroger will make Home Chef meal kits available to Kroger shoppers, both in stores and online.
Kroger expects the transaction to have no effect on 2018 earnings, and to be slightly accretive in 2019.