Food retailer Kroger Co. will buy Illinois-based meal kit delivery company Home Chef.
Ohio-based Kroger will pay $200 million plus "future earnout payments" of up to $500 million over five years, contingent on achieving certain milestones, including significant growth of in-store and online meal kit sales.
The acquisition is expected to boost Kroger's meal kit business. The retailer joined meal kits business in May 2017 with its own brand Prep + Pared, which is now available in more than 525 stores.
Home Chef has approximately 1,000 employees and operates three distribution centers in Chicago, Atlanta, and San Bernardino. Once the deal is complete, Home Chef will operate as a subsidiary of Kroger along with its e-commerce business. The meal kit company will be responsible for retailer's meal solutions portfolio and continue to operate from its facilities and office. Also, Home Chef meal kits will be available to Kroger customers, both in stores and online.
Kroger expects to close the transaction in the second quarter 2018, subject to customary closing conditions, including regulatory approval.
Weil, Gotshal & Manges LLP is the legal adviser to Kroger and Sidley Austin LLP is the legal adviser to Home Chef in this deal.
