CINCINNATI, July 2 -- Kroger Co. investors have seen this movie before, and Wednesday's opening scene did not reassure them. Shares fell nearly 3 percent before the market opened after the country's largest supermarket operator by revenue agreed to buy Giant Eagle, the family-owned Pittsburgh chain, for $1.65 billion. The market's verdict was immediate: another grocery acquisition, less than two years after the last one collapsed in court.

The deal, confirmed in a company statement, pairs $1.25 billion in cash with the assumption of roughly $400 million in Giant Eagle's outstanding liabilities. Kroger's board approved the transaction unanimously. Giant Eagle brings 197 supermarkets and 11 standalone pharmacies across northern Ohio, weste...