The largest U.S. supermarket chain, the Kroger Co. (NYSE: KR) is buying Vitacost.com Inc. (Nasdaq: VITC) for $280 million.
Vitacost sells more than 45,000 products, including vitamins, minerals, herbs, supplements, sports nutrition, beauty care products and natural and organic foods, online. The group has operations in Lexington, North Carolina and Las Vegas, Nevada.
The purchase price works out to $8 per share. Vitacost's shares closed at $5.48 on Feb. 19, the last day before a major company shareholder publicly asked the company to evaluate strategic alternatives.
Vitacost's e-commerce offerings will enable Kroger to serve customers in all 50 states, including 16 states where the company hasn't yet reached with its supermarkets. After the deal closes, Vitacost will operate as a subsidiary of Kroger.
Kroger, which operates a retail network of more than 2,600 supermarkets and department stores in 34 states, plans to finance the deal with debt. The company's brands include Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's. The company also operates convenience stores, jewelry stores, supermarket fuel centers and food processing plants.
Weil Gotshal & Manges LLP is Kroger's legal counsel on the deal. Jefferies LLC is Vitacosts's financial adviser, while Wilson Sonsini Goodrich & Rosati is providing legal advice.
Supplements companies have been attracting buyers lately. On July 1, Hormel Foods Corp. (NYSE: HRL) announced that it will buy the maker of Muscle Milk protein productsfor $450 million. In June, Capstone Financial Group Inc. agreed to invest $57 million in nutritional supplements group Twinlab Consolidation Corp.
For more on e-commerce, watch "Pent Up Demand for E-Commerce Technology Drives M&A." For more on supermarket M&A, see "Grocers Grow."