Kroger Co. on Wednesday said it has agreed to acquire Vitacost.com, a leading Internet retailer of vitamins, supplements and healthy living products, in a deal the company said would accelerate its nascent e-commerce strategy.
Kroger said it would pay approximately $280 million for Vitacost — a 50% premium to the price it was trading when activist shareholder Ryan Drexler and Consac LLC called on the company to sell itself in February. Vitacost reported $383 million in sales during 2013 but operating losses for four consecutive years including a $13.7 million loss in 2013.
The board of directors of both companies have approved the deal.
Kroger officials said Vitacost would help to jump-start its e-commerce strategy by providing a team with extensive e-commerce experience and a “substantial platform that includes technology and ship-to-home fulfillment centers to serve customers in all 50 states and internationally.”
Kroger currently offers Internet shopping only in its King Soopers division in Denver and through its newly acquired Harris Teeter division, which operates an online order and pick-up service. Vitacost also provides Kroger with a portfolio of products and brands in the fast-growing health and wellness categories.
“We are delighted to welcome Vitacost.com to the Kroger family,” Rodney McMullen, Kroger's CEO, said in a statement. “Vitacost.com’s talented team has built an exceptional online retail destination in the growing nutrition and wellness market, with an enviable technology and fulfillment infrastructure.
“This merger is in line with our growth strategy to enter new markets and new channels, and — along with Harris Teeter’s online order and pick up service —accelerates our efforts to provide customers with even more ways to shop. Vitacost.com’s core focus on healthy living products is complementary to our fast-growing natural foods business, and we intend to grow Vitacost.com’s strong position in the online nutrition market. At the same time, we will build on Vitacost.com’s eCommerce platform by integrating it with our existing digital offerings to create exciting new levels of personalization and convenience for our customers.”
Vitacost, based in Boca Raton, Fla., operates e-commerce fulfillment centers in Lexington, N.C. and in Las Vegas. They will enable Kroger to serve customers through ship-to-home orders in all 50 states, including 16 states that are currently not served by Kroger supermarkets. Vitacost.com’s website and mobile app offer robust product information, rich content including recipes, videos and customer reviews, and “Set & Save” subscriptions for thousands of items.
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