Crain's Roundup: Kroger to Buy Roundy's, Macy’s Considers State Street Makeover


Cincinnati giant Kroger puts Mariano's on its grocery list, McDonald's has a new recipe for success and Macy's is exploring a State Street redevelopment.

Crain’s Chicago Business deputy managing editor Ann Dwyer joins us to discuss these stories and other top business headlines of the week.

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Kroger to Merge with Mariano's Parent Roundy's

Cincinnati-based grocery chain giant Kroger has announced plans to purchase Milwaukee-based Roundy’s Inc., parent of Mariano’s grocery stores, at $3.60 per share in a deal valued to be worth $800 million, which includes Roundy’s debt.

Compared to the 2,623 stores that Kroger runs in 34 states, Roundy’s currently operates 151 grocery stores in Wisconsin and Illinois, including 34 Mariano’s stores in the Chicago area. Through the merger, Roundy’s will be run as a subsidiary of Kroger by members of Roundy’s senior management, and no store closings are planned.

For Kroger, the merger will allow the chain to gain new Midwestern ground in Wisconsin and expand in the Chicago area, where the company currently operates Food 4 Less stores.

Kroger Chairman and CEO Rodney McMullen said in a statement, "We admire what Bob Mariano has done with the Mariano's banner in Chicago, where he has created an urban format that is resonating with customers and we expect to apply Roundy's experience to our stores in urban areas around the country. Kroger's scale and strong financial position will enable Roundy's to reinvest in its home state of Wisconsin while continuing to grow in Chicago.”

Roundy's Chairman and CEO Robert A. Mariano echoed McMullen’s sentiments.

“Kroger's scale, knowledge and experience allows us to accelerate the strategic initiatives we have invested in and makes us a more formidable competitor in the marketplace,” Mariano said. “This is a great win for our customers, communities, employees and our shareholders, and I personally look forward to continue to exceed customer and employee expectations."


Molson Coors Taking Over

Molson Coors, which currently owns 42 percent of Chicago-based MillerCoors, is purchasing the remaining 58 percent stake from SABMiller for $12 billion, giving Molson Coors complete control of the business that produces Coors and Miller products.

The proposed deal for MillerCoors is meant to help gain antitrust approval as Anheuser-Busch InBev, who has been looking to do a megadeal with SABMiller for several months, submits its formal offer to buy SABMiller for about $107 billion.


McDonald's Latest Financial Moves

McDonald’s CEO Steve Easterbrook announced new plans for a turnaround involving cost cuts and adding more restaurants.

The company will slash $500 million in general and administrative costs by 2018, which is more than the $300 million goal that was announced in May. With the money saved from the cuts, McDonald’s plans to open 1,000 new restaurants globally next year and will add renovations to existing restaurants.

McDonald's plans to increase the number of restaurants to sell to franchisees to 4,000 by 2018, which will bring the percentage of franchise-owned restaurants up to 93 percent from 81 percent, bringing the company closer to its goal of 95 percent.

The company will also take on more debt in order to return $10 billion more in cash to shareholders by the end of 2016.


Macy's Considers State Street Options

Macy’s is exploring redeveloping its flagship State Street store in Chicago as it seeks new sources of revenue.

The Cincinnati-based retailer is considering converting unused upper floors of the mammoth, 12-story building to office space and residential uses to bring in new revenue. Another possibility is for Macy’s to sell only the upper, unused levels, or selling the entire building and leasing back the retail floors.

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