MATTHEWS, N.C. — As many as 18 companies expressed interest in a potential merger with Harris Teeter Supermarkets before the retailer agreed to a deal with Kroger Co., according to a proxy statement filed with federal regulators late last week.
In the end, Harris Teeter chose Kroger’s $2.4 billion bid for the entire company over a competing cash-and-stock bid from a private equity firm. Harris Teeter in the filing identified the latter group only as “Party P,” but SN reported last month that the offer was from Cerberus Capital Management. Harris Teeter said its financial advisors, J.P. Morgan, expressed reservations about the “Party P” offer, citing a lengthier route to approval, and concerns around associating with its portfolio of supermarkets, which required significant capital.
In the meantime negotiations with Kroger focused on the per-share price and provisions such as break-up fees and the right to “shop” the offer to other parties. In the end, Harris Teeter’s board agreed to a $49.38-per-share offer from Kroger. The Cincinnati-based company initially expressed interest in bidding for Harris Teeter in April, saying it would offer between $42 and $45 per share. Its offers subsequently increased to $47.50 and $48.75 as negotiations continued, the filing said.
Harris Teeter’s interest in pursuing a potential merger dated back more than two years after informal discussions between Harris Teeter President Fred Morganthall and an unidentified chief executive of a supermarket chain in April of 2011. While those discussions did not advance to the negotiating stage, Harris Teeter in May and June of 2012 fielded separate offers from private equity firms. When word got out that Harris Teeter had hired J.P. Morgan to facilitate potential merger discussions with those parties, additional inquiries flowed in.
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