Kroger and Peak Rock Capital Announce Definitive Agreement for Purchase of Kroger's Turkey Hill Business

Turkey Hill Business to be Sold to an Affiliate of Peak Rock Capital

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Mar 19, 2019, 16:05 ET

CINCINNATI and AUSTIN, Texas, March 19, 2019 /PRNewswire/ -- The Kroger Co. (NYSE: KR) and Peak Rock Capital, a leading middle-market private equity firm based in Austin, Texas, today announced a definitive agreement for the sale of Kroger's Turkey Hill business to an affiliate of Peak Rock Capital.

As part of the sale agreement, the Peak Rock Capital affiliate will continue to operate the Turkey Hill business out of its large Conestoga, Penn., facility with its nearly 800 full-time, part-time and seasonal associates and under the same recognizable Turkey Hill brand.

"We believe this is the right step to ensure the Turkey Hill business can meet its full potential and continue to grow its successful ice cream and beverage brands," said Erin Sharp, group vice president for Kroger Manufacturing. "Throughout this process, we were extremely impressed with Peak Rock's professionalism and vision for the future of the Turkey Hill business. We look forward to working with them to ensure a smooth and successful transition for all parties."

Robert Pistilli, Managing Director of Peak Rock Capital, said, "Turkey Hill represents an exciting opportunity to invest in a premier brand with an established reputation for quality, flavor variety, and authenticity, within the large and growing ice cream and refrigerated drinks space. We are impressed with the accomplishments of the business under the stewardship of Kroger and look forward to completing a seamless transition of the business to a standalone entity and partnering with Turkey Hill's management team to drive significant growth through continued product innovation."

Anthony DiSimone, Chief Executive Officer of Peak Rock Capital, added, "We believe that Turkey Hill represents an excellent platform for growth through near-term organic initiatives and strategic acquisitions. We will be aggressively pursuing complimentary acquisitions to extend the product and brand portfolio."

Turkey Hill produces a full line of popular iced teas, fruit drinks, milk, frozen dairy treats and a variety of ice cream products at its manufacturing and distribution facility.

Kroger announced in August 2018 its intention to explore strategic options for its Turkey Hill business, including a potential sale.

Closing is expected during Kroger's first quarter and the after-tax proceeds will be used to reduce debt.

Additional Information
The transaction is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The company expects the transaction to close quickly.

Goldman Sachs & Co. LLC is acting as exclusive financial advisor to Kroger.

About Kroger
At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose: to Feed the Human Spirit™. We are nearly half a million associates who serve nine million customers daily through a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities by 2025. To learn more about us, visit our newsroom and investor relations site.

About Peak Rock Capital
Peak Rock Capital is a leading middle-market private investment firm that makes equity and debt investments in companies in North America and Europe. Peak Rock focuses on investing in opportunities where it can support senior management in driving rapid growth and profit improvement through operational and strategic change. Peak Rock's principals have deep expertise in complex situations, carve-outs, and cross border transactions, with the ability to provide tailored capital solutions and close transactions quickly where speed and certainty are priorities. For further information about Peak Rock Capital, please visit www.peakrockcapital.com.

This press release contains forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, about the future performance of Kroger. These statements are based on management's assumptions and beliefs in light of the information currently available to it. These statements are indicated by words such as "plans" and similar words. The closing of the transaction will be dependent upon approval receipt of all necessary regulatory approvals and the satisfaction or waiver of the conditions to closing. Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward-looking statements. These include the specific risk factors identified in "Risk Factors" and "Outlook" in Kroger's annual report on Form 10-K for our last fiscal year and any subsequent filings, as well as the following:

Our ability to use free cash flow to continue to maintain our investment grade debt rating and repurchase shares, pay dividends, and fund capital investments, could be affected by unanticipated increases in net total debt, our inability to generate free cash flow at the levels anticipated, and our failure to generate expected earnings.

SOURCE The Kroger Co.