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Kroger’s newest acquisition is a fast-growing meal kit company

Meal kits are heating up the grocery wars, both in store and online.

Kroger Co. is acquiring Home Chef, the country's largest private meal kit company by sales, in a deal that could total $700 million. Kroger said it would pay an initial purchase price of $200 million and up to an additional $500 million in "earnout" payments to Home Chef if certain sales and other performance goals are met. The deal comes a week after Kroger took a stake in British online grocer Ocado Group.

Once the deal, which is subject to regulatory approval, is completed, Kroger will make Home Chef meal kits available online and in its stores. The Chicago-based company will operate as a subsidiary of Kroger, maintain its e-commerce business, and assume responsibility for Kroger's meal solutions portfolio. Home Chef will continue to operate its offices and facilities.

“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. "As one of the fastest growing meal kit companies in the country, Home Chef is poised for even more explosive growth. We admire their focus on the customer, culture of collaboration, dynamic experimentation, and demonstrated financial success.”

Kroger rival Albertsons acquired meal kit company Plated last summer. It plans to roll out the kits to hundreds of stores by yearend. Walmart will make its meal kits be available in more than 2,000 of its stores over the course of this year.

And Blue Apron recently plans to sell its kits in supermarket.

The deal is not Kroger’s first entry into meal kits. The grocer’s Prep+Pared meal kits are now available in more than 525 stores. Kroger said the Home Chef meals would complement its own offering.

"Customers want convenience, simplicity and a personalized food experience,” Cosset said. “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.”

Kroger expects the transaction to have no effect on 2018 earnings, and to be slightly accretive in 2019.
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