Kroger wins $16M bid to buy competitor’s stores

June 14, 2017

By Steve Watkins, Cincinnati Business Courier

Kroger Co. has won its bid to buy 11 Marsh Supermarkets stores in Indiana through federal bankruptcy court.

Kroger, through its Topvalco Inc. unit, will pay $16 million to acquire seven Marsh stores in the Indianapolis area and two each in Bloomington and Muncie, according to documents filed in U.S. Bankruptcy Court in Delaware.

Cincinnati-based Kroger (NYSE: KR) is the nation’s largest operator of traditional supermarkets with 2,796 stores in 35 states and the District of Columbia. It operates under nearly two dozen different names, but the stores in Indiana will likely become Kroger locations. That’s the banner under which it already operates its traditional supermarkets there.

Kroger officials declined to comment, citing the company’s upcoming earnings announcement on Thursday morning.

Kroger has 137 stores in its Indiana division, which spills over into surrounding states. That includes 24 stores in Indianapolis. It has four stores in the Bloomington area. The only store it operates in the Muncie area is a Ruler Foods deep-discount store.

The deal is scheduled to close between July 11 and July 21, according to the sale agreement filed in bankruptcy court.

Findlay, Ohio-based Fresh Encounter, which bought locally based Remke Markets earlier this year, won a bid to buy the 15 other Marsh stores that were auctioned Tuesday. It will pay $8 million for 15 stores in smaller markets in Indiana and Ohio, including the Marsh store in Middletown. That’s the only Greater Cincinnati store involved in the auction.

Marsh, based in the Indianapolis area, used to be a powerhouse in the supermarket business in its home region, but Kroger has passed Marsh in recent years and now has about 35 percent market share in Indianapolis while Marsh has about 15 percent, Burt Flickinger III, managing director of New York-based consumer industry consulting firm Strategic Resource Group, told me. Those figures were roughly reversed about a dozen years ago, he said.

Marsh filed for bankruptcy last month after it struggled to battle Kroger as well as Wal-Mart and other competitors. At its height, Marsh had more than 100 stores, but it was down to 44 locations at the time of the bankruptcy filing. The recent auction will leave it with just 18 stores.

Kroger’s last supermarket acquisition was its $800 million deal in December 2015 to buy Milwaukee-based Roundy’s Inc. and its 151 stores in Wisconsin and the Chicago area. It bought specialty cheese retailer Murray’s Cheese, which operates in 350 Kroger stores, in February. Kroger is frequently rumored as a potential buyer for supermarkets that are for sale around the country, including most recently Cub Foods in Minneapolis.