The dust has settled from Kroger’s blockbuster acquisition announcement of upscale supermarket retailer Harris Teeter, and it appears to be a win-win for both parties. The latter, which was grown into a $4.5 billion grocery retailer, falls into the hands of the top supermarket operator in the nation. Kroger has been a Wall Street darling of its own for the past few years, and some analysts even believe the company is undervalued. It’s hard to argue their point, as the company approached the $100 billion mark last year and has remained very profitable for a supermarket retailer.

In my opinion, there will be no regulator opposition to this deal. There will be very little overall in markets served when company is integrated. When looking at the combined company, the lack of overlap does not make this deal less attractive; in fact I think it’s the opposite. Kroger gains access to attractive growth markets in which it was not previously operating on the East Coast. Economies of scale and cost savings will also be realized. As stated earlier, Kroger was in a good financial position to make an acquisition and made an all-cash offer. Publix and Ahold were previously rumored to purchase Harris Teeter; with Publix’s future expansion into NC, it might need to also look at potential acquisitions in the area to better compete with Kroger. With Kroger’s broad store base and industry expertise, Harris Teeter’s stores will continue to operate at a high volume and could possibly improve profitability. On the other side of the coin, Kroger could learn from some of Harris Teeter’s successes and look to integrate into future store openings or remodels.

Data from Chain Store Guide highlights some key areas for the retailers. In the Raleigh, Charlottesville, and Virginia Beach markets, Kroger will strengthen its position against its two main competitors: Walmart and Food Lion. Kroger will remain the #1 operator in the Nashville market.

Kroger/Harris Teeter Overlapping Markets*
Core-Based Statistical Areas

*Source: Chain Store Guide’s 2013 Grocery Industry Market Share Report