Kroger Beat 18 Others For Harris Teeter, Proxy Says

Before Kroger (NYSE:KR) made its successful $2.4 billion bid for Harris Teeter (NYSE:HTSI), at least 18 other bidders expressed serious interest in buying the grocer, according to a Harris Teeter proxy statement filed last week that includes a detailed account of the process.

That's striking testimony to just how much attention a regional supermarket chain can get from potential acquirers, especially at a time when grocery chains aren't getting much respect from Wall Street. In April, Kroger CFO Michael Schlotman had to remind a financial conference that many grocers are doing fine. "It's just that a lot of people who invest for a living don't recognize they exist, because they can't own a piece of that action," he said.

According to the proxy statement filed with the Securities and Exchange Commission on Aug. 2, one unnamed supermarket chain CEO approached Harris Teeter president Fred Morganthall in April 2011 about a merger, and two private equity firms expressed interest in the company in May and June 2012. By the time the Harris Teeter board made up its mind, a total of 19 potential buyers had shown interest.

But eventually the competition came down to two bidders: Kroger and a private equity firm identified only as Party P. That firm is widely believed to be Cerberus Capital Management, which was reported by the Wall Street Journal to be bidding on the chain. The board's concerns about Party P, including the time it would take to close the deal, and Kroger's willingness to boost its bid to $2.4 billion eventually gave the top U.S. grocer the deal.

Officially, though, the Kroger deal isn't done. Regulatory approvals still need to be completed, and a potential class action lawsuit filed last month in North Carolina is seeking to block the merger.

For more:

- See this Supermarket News story
- See the proxy statement

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