Kroger Negotiates

Discussion
Mar 10, 2003
George Anderson

By George Anderson


The Cincinnati Business Courier reports Kroger is interested in buying Dominick’s from Safeway.


Dominick’s has continued to lose customers, market share and money under Safeway ownership and some believe the chain can be had at a bargain price. Industry analysts, according to the report, believe that Safeway may be willing to part with the chain for $500 million, or $4.4 million per store.


The low-cost of acquisition may be attractive compared “to the $6.6 million per store Kroger spent on building, acquiring and remodeling stores in 2001, according to company filings with the Securities and Exchange Commission.”


Kroger’s current presence in the Chicago market consists of two Food 4 Less stores. Store employees are not part of a union. Any acquisition of Dominick’s would require negotiating a contract with the United Food and Commercial Workers (UFCW).


Kroger and the UFCW are currently at odds in Indiana, Michigan and Ohio. Three-hundred associates in those states have previously voted in favor of taking “economic action up to and including a strike” unless a new labor agreement can be worked out.


Associates continue to work under the provisions of a previous agreement that expired last Sept. 28. The two parties remain split on wages and health insurance.


Moderator’s Comment: Should Kroger aggressively pursue
a deal to acquire Dominick’s?


The combination of the damage that Safeway has done to
Dominick’s and the prospect of negotiating with the UFCW would be enough to
dissuade us from entering the bidding. [George
Anderson – Moderator
]

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