Kroger to Buy Vitacost for $280 Million

Kroger Co. (KR), the largest U.S. supermarket chain, agreed to buy online retailer Vitacost.com Inc. (VITC) for $280 million to add a new channel for selling nutrition and healthy-living products.

The $8-a-share deal has been approved by both boards and by holders of 26 percent of Vitacost’s shares, the companies said today in a statement. The bid represents a 51 percent premium to Vitacost’s closing price on Feb. 19, the day before one of its investors publicly asked it to seek strategic alternatives and is 27 percent higher than yesterday’s close.

Kroger, based in Cincinnati, has been boosting revenue by selling more organic and natural food under its Simple Truth label. Boca Raton, Florida-based Vitacost generated $382.7 million in revenue last year selling vitamins, minerals, herbs, health food and nutrition products.

Kroger fell 0.2 percent to $49.43 at the close in New York and has climbed 25 percent this year. Vitacost gained 27 percent to $7.97 and has advanced 38 percent in 2014.

Kroger, which named W. Rodney McMullen chief executive officer at the beginning of this year, bought the Harris Teeter supermarket chain for $2.5 billion in January. The addition of the southeastern U.S. grocer, as well as selling more organics, helped boost revenue by 10 percent in Kroger’s most recent quarter.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Kevin Orland at korland@bloomberg.net John Lear

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