Kroger has announced the acquisition of Giant Eagle, a regional grocery and pharmacy retailer, in a transaction valued at $1.65 billion. Giant Eagle operates 197 supermarkets and 11 standalone pharmacies across several states, including northern Ohio, western Pennsylvania, West Virginia, Maryland, and Indiana. Kroger manages thousands of stores under various brands like Ralphs, King Soopers, Smith’s, and Fred Meyer.

The deal involves $1.25 billion in cash, along with the assumption of approximately $400 million in outstanding liabilities. According to Kroger CEO Greg Foran, Giant Eagle is a well-operated, high-quality grocer with a strong reputation for fresh products, pharmacy, private label, and customer loyalty. Foran, who joined Kroger as CEO in February, is regarded as a tech-savvy and detail-oriented leader, having previously worked with Walmart.

To comply with regulatory requirements, Kroger and Giant Eagle may need to sell a limited number of Giant Eagle stores. The companies expect the deal to finalize next year. Following the announcement, Kroger’s stock decreased by nearly 3% in pre-market trading.