Retailing giant Kroger on Monday announced it has acquired a significant portion of Dunnhumby Ltd., a data analytics firm owned by Tesco.
Kroger is rolling its newly acquired assets into a new business called 84.51° (a nod to the longitude of Cincinnati, Kroger’s and 84.51°’s home base). The new unit is a wholly-owned subsidiary of The Kroger Co.
Over 500 of DunnhumbyUSA’s employees will become employees of 84.51°, per a release, including Stuart Aitken, former head of DunnhumbyUSA. Aitken will serve as CEO of 84.51°.
Dunnhumby’s analytics tool was not acquired outright by Kroger. However, Kroger -- via the 84.51° unit -- will license the tool “perpetual[ly].” Dunnhumby will provide maintenance on the tools for five years, per a release, but will no longer have access to Kroger’s data.
Dunnhumby Ltd. will continue to operate in the U.S. as Dunnhumby, as not all of its employees are being shifted over to the new 84.51° unit (and Kroger did not buy the entire company). Additionally, Kroger and Dunnhumby note in a release that “there are no anticipated headcount reductions as a result of the new arrangements.”
The deal does free up both Kroger and Dunnhumby to be more flexible -- putting them back on the market, in a sense.
There is no exclusivity between 84.51° and Dunnhumby, meaning Kroger can use other data firms to analyze its data. And as Dunnhumby will continue to operate as a standalone company in the U.S. (albeit with fewer employees), it is now “free to work with new retail and FMCG clients and to develop its existing strong platform of client relationships in the US and globally,” the company wrote in a blog post.
There’s a lot to unpack in the deal -- it’s not a cut and dried acquisition. Essentially, Kroger bought a large portion of Dunnhumby and struck a licensing agreement to launch its own innovation-focused company in 84.51° while freeing itself up to work with other data analytics companies in the process, and Dunnhumby -- while downsizing its U.S. operations -- opened the doors to new U.S. partnerships.
Terms of the deal were not disclosed.