KR - BUY - Acquiring A GIANT Eagle Ahead of Independence Day—An Inexpensive Asset With Strong Market Share and Significant Potential Synergies; We Stay BUY-Rated

Research evidence excerpt

KR - BUY - Acquiring A GIANT Eagle Ahead of Independence Day—An Inexpensive Asset With Strong Market Share and Significant Potential Synergies; We Stay BUY-Rated

July 1, 2026

John Heinbockel john.heinbockel@guggenheimpartners.com KR - BUY - Acquiring A GIANT Eagle Ahead of

212 381 4135 Independence Day—An Inexpensive Asset With

Steven Forbes, CFA, CPA

steven.forbes@guggenheimpartners.com Strong Market Share and Significant Potential

212 381 4188 Synergies; We Stay BUY-Rated Julio Marquez

julio.marquez@guggenheimpartners.com

212 823 6605 Key Message: Today’s incremental share price weakness is a function of both the

Jacob Nivasch unexpected, though accretive, Giant Eagle acquisition and ongoing concerns about

jacob.nivasch@guggenheimpartners.com stepped-up pricing intensity in a potentially re-inflationary operating backdrop. We

212 338 8837 understand the latter, although price wars have been avoided during the past decade,

driven by improved data analytics around demand elasticity and the resulting sizable Max Horowitz

max.horowitz@guggenheimpartners.com costs of truly altering volume trajectories. As to the former, we believe Giant Eagle is a

212 518 9974 solid asset, in compelling, adjacent Midwest markets, poised to benefit from significant

potential synergies. Moreover, the transaction is surprisingly inexpensive and thus likely

to produce healthy EPS accretion by 2028. Because we regard the twin goals of volume

improvement and EBIT margin expansion as achievable, we remain BUY-rated at 5.8x

KR BUY 2026E EBITDA—see Exhibit 1—with a $71 Price Target.

The Kroger Co. Gradual, Geographically Sound M&A-Driven Growth. The Giant Eagle acquisition marks Sector: Food Retail a return to geographically targeted M&A, with a well-positioned asset, in the heart of Kroger