Kroger announced it has bought Whole Foods for $5bn in a deal that also includes the company’s acquisition of Whole Foods Market in Canada.

The supermarket chain, which has been struggling to keep up with rising food costs and competitors, is one of the largest grocery retailers in the US.

The deal will take Kroger into the $100bn US grocery industry, where it is the biggest player.

“We have been focused on bringing value to our customers for a long time, and this acquisition will allow us to create a truly global grocery market in the coming years,” said Tim Phillips, Kroger CEO.

“Kroger is a global leader in groceries, and our grocery brands are a key part of our global growth strategy.”

Krogers $5b buyout will make Kroger the largest company in the country, overtaking Wal-Mart.

Kroger already has the biggest grocery store chain in the world, with stores in 39 countries.

Krogeas share price rose 2.4 per cent on the news, to $62.11.

The shares were trading around $60.

The grocery store giant, which operates more than 300 stores across the US and Canada, will operate the stores for 10 years, as well as operating the food-service chain.

The US market is expected to grow by 3.5 per cent this year.

Kobler said the deal is expected close by the end of the year, and the deal will include a $100m share buyback programme.

The company will invest $50m in the stores and a $10m incentive package for each of the four employees who join the company, Krogeas chief executive, Jeff Kostelnik, said in a statement.

“The Kroger team will be able to stay focused on growing our brands, and we are committed to building a truly world-class grocery store,” Kroger said.

“In our current environment, Krogers purchase of Whole Food Market was a strategic move, one that will create significant value for our shareholders, the Kroger community and the entire Kroger family.”

Read moreKrober is the largest supermarket chain in America.

Its stores in the United States, Canada and Mexico operate over 2.5 million stores, with more than 500,000 in its core grocery business.

Its brands include Cheerios, Lidl, Gatorade, Frito-Lay and Heinz.

K Kroger, founded in 1971, operates more stores in 37 countries.