Kroger Confirms $280 Million Acquisition Of Vitacost


Kroger (NYSE: KR) signed a definitive agreement to acquire online health retailer (NASDAQ: VITC) for $8 per share in cash, or $280 million.

The price represents a 51 percent premium to Vitacost's February 19 closing price, the day before a Vitacost shareholder publicly asked the company to evaluate alternatives.

Following a trading halt for news, Vitacost jumped 27 percent in Wednesday's pre-market activity to $7.98.

Kroger will use debt to finance the deal, and said it will achieve a ratio of net debt to EBITDA of 2.00 - 2.20 by mid-to-late 2015. Kroger added it's committed to maintaining its current investment grade credit rating by managing free cash flow.

Kroger reaffirmed its fiscal 2014 outlook for net earnings in a range of $3.19 to $3.27 per share, adding that it expects to maintain its current long-term earnings growth of eight percent to 11 percent, plus an increasing dividend.

Vitacost posted fiscal 2013 revenue of $382.7 million and had about 2.3 million total active customers as of the end of the 2014 fiscal quarter, when it shipped 1.5 million orders.

Kroger's annual revenue was $98.38 billion. Shares closed Monday at $43.53.

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