<PAGE> 1
[LATHAM & WATKINS LETTERHEAD]
October 30, 1996
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: THE VONS COMPANIES, INC.
Ladies and Gentlemen:
Pursuant to Rule 13d-2 and on behalf of Safeway Inc., Safeway
Southern California, Inc. and Safeway U.S. Holdings, Inc. (the "Reporting
Persons"), we hereby file with the Securities and Exchange Commission (the
"Commission") via EDGAR the enclosed Amendment No. 10 to Schedule 13D filed by
the Reporting Persons which amends the Schedule 13D filed September 16, 1988
relating to the Common Stock of The Vons Companies, Inc. A copy of Amendment No.
10 to the Schedule 13D has also been sent by certified mail to the principal
executive office of The Vons Companies, Inc. and by Federal Express to the New
York Stock Exchange.
Please contact the undersigned at (415) 395-8131 with any
questions.
Very truly yours,
/s/ Laura L. Gabriel
Laura L. Gabriel
of LATHAM & WATKINS
Enclosures
cc: The Vons Companies, Inc.
New York Stock Exchange
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
SCHEDULE 13D
(Amendment No. 10)
Under the Securities Exchange Act of 1934
THE VONS COMPANIES, INC.
------------------
(Name of issuer)
Common Stock, Par Value $.10 Per Share
---------------------------
(Title of class of securities)
928869-10-6
-----------
(CUSIP number)
Michael C. Ross, Esq.
Senior Vice President
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, California 94588
(510) 467-3000
----------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
COPY TO:
Scott R. Haber
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
(415) 391-0600
October 30, 1996
--------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with the statement: [ ]
Page 1 of 18 Pages
Exhibit Index is on Page 15
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SCHEDULE 13D
CUSIP No. 928869-10-6
1. Name of Reporting Person
Safeway Southern California, Inc.
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds
AF
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
-0-
Number of
Shares 8. Shared Voting Power
Beneficially 15,126,000
Owned By
Each
Reporting 9. Sole Dispositive Power
Person -0-
With
10. Shared Dispositive Power
15,126,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
15,126,000
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
34.5%
14. Type of Reporting Person
CO
2
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SCHEDULE 13D
CUSIP No. 928869-10-6
1. Name of Reporting Person
Safeway Inc.
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds
WC/OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
-0-
Number of
Shares 8. Shared Voting Power
Beneficially 15,126,000
Owned By
Each
Reporting 9. Sole Dispositive Power
Person -0-
With
10. Shared Dispositive Power
15,126,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
15,126,000
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
34.5%
14. Type of Reporting Person
CO
3
<PAGE> 5
SCHEDULE 13D
CUSIP No. 928869-10-6
1. Name of Reporting Person
Safeway U.S. Holdings, Inc.
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds
AF
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
-0-
Number of
Shares 8. Shared Voting Power
Beneficially
Owned By 15,126,000
Each
Reporting 9. Sole Dispositive Power
Person -0-
With
10. Shared Dispositive Power
15,126,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
15,126,000
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
34.5%
14. Type of Reporting Person
CO
4
<PAGE> 6
This Amendment No. 10 to Schedule 13D ("Amendment No. 10")
amends the Statement on Schedule 13D filed September 16, 1988, and all
amendments thereto (the "Schedule 13D"), by Safeway Southern California, Inc., a
Delaware corporation ("SSCI"), Safeway Inc. (formerly Safeway Stores,
Incorporated), a Delaware corporation ("Safeway"), and Safeway U.S. Holdings,
Inc., a Delaware corporation ("SUSHI", and together with SSCI and Safeway, the
"Reporting Persons"), relating to the Common Stock, par value $.10 per share
(the "Shares"), of The Vons Companies, Inc., a Michigan corporation (the
"Company"). Capitalized terms used herein and not defined have the same meanings
ascribed to them in the Schedule 13D.
Item 2. Security and Issuer.
Item 2 is hereby amended and restated in its entirety as
follows:
(a)-(c), (f) This Schedule is being filed by the Reporting
Persons.
Safeway, directly and through its subsidiaries, is engaged in
the retail grocery business and operates related supply and distribution
facilities. SUSHI is a direct wholly owned subsidiary of Safeway and holds all
of the outstanding shares of certain of Safeway's United States operating
subsidiaries. SSCI is a direct wholly owned subsidiary of SUSHI and prior to
August 29, 1988 held all of the outstanding shares of certain subsidiaries which
operated Safeway's Southern California retail grocery, distribution and supply
facilities. SSCI presently holds all of the outstanding shares of certain
subsidiaries which operate supply facilities in Southern California. The
business address of each of the Reporting Persons is 5918 Stoneridge Mall Road,
Pleasanton, California 94588. It is presently contemplated that SUSHI will be
merged into Safeway, whereupon its separate existence shall cease. As a result,
SSCI will be a direct subsidiary of Safeway.
The principal stockholders of Safeway are SSI Associates,
L.P., a Delaware limited partnership ("SSI Associates"), and KKR Partners II,
L.P., a Delaware limited partnership ("Partners II", and together with SSI
Associates, the "Partnerships"). The general partner of the Partnerships is KKR
Associates, a New York limited partnership ("KKR Associates"). KKR Associates
and Partners II hold, through partnerships, investments in a number of
industrial and other companies. The principal business of SSI Associates is to
hold the common stock of Safeway. The business address of each of the KKR
Associates and the Partnerships is 9 West 57th Street, New York, New York 10019.
Schedule I attached hereto lists each executive officer and
director of each of the Reporting Persons and the present principal occupation
or employment and business address of each such executive officer and director.
Schedule I lists each general partner of KKR Associates and the present
principal occupation or employment and business address of each such general
partner. The information set forth in Schedule I, which is incorporated herein
by reference, supersedes in its entirety the information previously listed on
Schedule I to the Schedule 13D.
(d) and (e). During the last five years, none of the Reporting
Persons, nor to the best knowledge of the Reporting Persons, any other person
named in this Item 2 or on Schedule I has (i) been convicted in a criminal
proceeding (excluding traffic violations or similar
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<PAGE> 7
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Item 4. Purpose of Transaction.
Items 3 and 4 are hereby amended as follows:
On October 30, 1996, Safeway submitted a letter to the Board
of Directors of the Company, which letter is filed as Exhibit 2 and is
incorporated by reference herein (the "Proposal Letter"). The Proposal Letter
sets forth Safeway's proposal to enter into a stock-for-stock business
combination in which each Share not currently owned by Safeway would be
converted into 1.34 shares of Safeway Common Stock, which, based on the closing
price of Safeway stock on October 29, 1996 would have a value in excess of
$58.00 per Share. As a result of the transaction, the Company would become a
wholly owned subsidiary of Safeway. Also, on October 30, 1996, Safeway issued a
press release announcing that it had submitted the Proposal Letter. A copy of
the press release is filed herewith as Exhibit 3 and is incorporated herein by
reference.
The Reporting Persons have determined to pursue the proposed
business combination to seek to change their position as a minority shareholder
in the Company, and intend to take the steps necessary to complete such
transaction, which steps may include, but not be limited to, the discussion,
negotiation and completion of a merger agreement. There can be no assurance,
however, that such transaction will be consummated, or that if it is
consummated, that such a transaction will be consummated on the terms set forth
in the Proposal Letter. A business combination of the Company and the Reporting
Persons would be subject to a number of conditions, including satisfaction of
regulatory requirements (including compliance with applicable provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and other
conditions.
It is anticipated that in order to effect the business
combination described herein, Safeway would issue newly issued shares of its
common stock.
Depending upon the response of the Company's Board of
Directors to the Proposal Letter, the Reporting Persons reserve the right to
formulate other plans or make other proposals, and take such actions with
respect to their investment in the Company, including any or all of the items
set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D and any other
actions, as they may determine.
Other than as described herein, and in furtherance of the
proposed business combination, the Reporting Persons have no present plans or
proposals which relate to or would result in: (i) the acquisition by any person
of additional securities of the Company, or the disposition of securities of the
Company; (ii) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(iii) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries; (iv) any change in the present Board or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing
6
<PAGE> 8
vacancies on the Board; (v) any material change in the present capitalization or
dividend policy of the Company; (vi) any other material change in the Company's
business or corporate structure; (vii) changes in the Company's certificate of
incorporation or by-laws or other actions which may impede the acquisition of
control of the Company by any persons; (viii) causing a class of securities of
the Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (ix) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended; or (x) any action
similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
Item 5(a) to the Schedule 13D is amended and restated in its
entirety as follows:
(a) The Reporting Persons beneficially own an aggregate of
15,126,000 Shares, which represents approximately 34.5% of the outstanding
Shares (based on 43,822,951 Shares outstanding at July 22, 1996 as reported in
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June
16, 1996). All of such Shares are held of record by SSCI. The Reporting Persons
share the power to vote, or direct the vote, and to dispose or direct the
disposition of, all such Shares.
Each of Messrs. Burd, Greene, MacDonnell and Magowan is a
director of the Company and, as of October 29, 1996, held options to purchase
Shares as set forth on Schedule II. Such options were granted pursuant to the
Company's Directors' Stock Option Plan.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Joint Filing Agreement dated as of November 9, 1993, which was
filed as Exhibit 99.1 to Amendment No. 9 to the Schedule 13D
filed on November 10, 1993 by the Reporting Persons and is
incorporated by reference herein.
Exhibit 2 Letter from Safeway to the Company dated October 30, 1996.
Exhibit 3 Press Release dated October 30, 1996.
7
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SIGNATURE
After reasonable inquiry and to the best of each of the
undersigned's knowledge and belief, the undersigned certify that the information
set forth in this statement is true, complete and correct.
Dated: October 30, 1996 SAFEWAY INC.
By: /s/ Michael C. Ross
-------------------
Name: Michael C. Ross
Title: Senior Vice President -
General Counsel
Dated: October 30, 1996 SAFEWAY SOUTHERN CALIFORNIA INC.
By: /s/ Michael C. Ross
-------------------
Name: Michael C. Ross
Title: Vice President
Dated: October 30, 1996 SAFEWAY U.S. HOLDINGS, INC.
By: /s/ Michael C. Ross
-------------------
Name: Michael C. Ross
Title: Vice President
8
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SCHEDULE I
Executive Officers and Directors of Corporate Reporting Persons
The following are the directors and executive officers of each
of Safeway Inc., Safeway U.S. Holdings, Inc. and Safeway Southern California,
Inc. Unless otherwise indicated, the principal occupation or employment of each
of such persons is the position that such person holds with Safeway, the
business address of each of such persons is c/o Safeway, 5918 Stoneridge Mall
Road, Pleasanton, California 94588 and each is a United States citizen.
Safeway Inc.
Directors
Peter A. Magowan, Chairman
Steven A. Burd
Sam Ginn
James H. Greene, Jr.
Paul Hazen
Henry R. Kravis
Robert I. MacDonnell
George R. Roberts
Michael T. Tokarz
The business address of Mr. Ginn is 1 California Street, 30th Floor, San
Francisco, California 94111. Mr. Ginn is Chairman of the Board and Chief
Executive Officer of AirTouch Communications, Inc., a worldwide wireless
telecommunications company. The business address of Mr. Hazen is 420 Montgomery
Street, San Francisco, California 94163. Mr. Hazen is Chairman of the Board and
Chief Executive Officer of Wells Fargo & Company and its principal subsidiary,
Wells Fargo Bank, National Association, a commercial bank. The business
addresses and principal occupations of Messrs. Greene, Kravis, MacDonnell,
Roberts and Tokarz are set forth below under "General Partners of KKR
Associates." The business address of Mr. Magowan is 3Com Park at Candlestick
Point, San Francisco, California 94124. Mr. Magowan is Managing General Partner
and President of the San Francisco Giants, a baseball organization.
Executive Officers
Steven A. Burd President & Chief Executive Officer
Kenneth W. Oder Executive Vice President, Labor Relations,
Human Resources, Law and Public Affairs
Julian C. Day Executive Vice President and Chief Financial
Officer
E. Richard Jones Executive Vice President, Supply Operations
9
<PAGE> 11
Frithjof J. Dale Group Vice President, Finance
David T. Ching Senior Vice President and Chief Information
Officer
Diane Peck Senior Vice President, Human Resources
Melissa C. Plaisance Senior Vice President, Finance and Public
Affairs
Larree M. Renda Senior Vice President, Corporate Retail
Operations
Michael C. Ross Senior Vice President, Secretary and General
Counsel
Gary D. Smith Senior Vice President and Director of
Marketing
Donald P. Wright Senior Vice President, Real Estate and
Engineering
George D. Marshall Vice President, Labor Relations
Richard A. Wilson Vice President, Tax
The business address of Mr. Jones is c/o Safeway Inc., 2800 Ygnacio Valley Road,
Walnut Creek, California 94598. Mr. Wright is a citizen of Canada. Mr. Day is a
citizen of the United Kingdom.
Safeway U.S. Holdings, Inc.
Directors
Steven A. Burd
Julian C. Day
Kenneth W. Oder
Executive Officers
Frithjof J. Dale President
Michael C. Ross Vice President, Secretary & Treasurer
Dennis J. Dunne Vice President
Harvey K. Naito Vice President
10
<PAGE> 12
Donald B. Shaw Vice President
Richard A. Wilson Vice President
Donald P. Wright Vice President
Safeway Southern California, Inc.
Directors
Frithjof J. Dale
Harvey K. Naito
Michael C. Ross
Executive Officers
Frithjof J. Dale President
Michael J. Boylan Vice President
Dennis J. Dunne Vice President
Harvey K. Naito Vice President and Treasurer
Michael C. Ross Vice President and Secretary
Donald B. Shaw Vice President
Richard A. Wilson Vice President
Donald P. Wright Vice President
General Partners of KKR Associates
The following are the names and business addresses of the
general partners of KKR Associates, each of whom is a United States citizen.
Messrs. Kravis and Roberts are also the members of the executive committee of
KKR Associates. The present principal occupation or employment of each of such
general partners is as a member of KKR & Co. L.L.C., a Delaware limited
liability company that is the general partner of Kohlberg Kravis Roberts & Co.
L.P. ("KKR"), a private investment firm.
Henry R. Kravis
George R. Roberts
Robert I. MacDonnell
Paul E. Raether
11
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Michael W. Michelson
James H. Greene, Jr.
Michael T. Tokarz
Edward A. Gilhuly
Perry Golkin
Clifton S. Robbins
Scott Stuart
The business address of Messrs. Kravis, Raether, Tokarz, Golkin, Robbins and
Stuart is 9 West 57th Street, New York, New York 10019. The business address of
Messrs. Roberts, MacDonnell, Michelson, Greene and Gilhuly is 2800 Sand Hill
Road, Menlo Park, California 94025.
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Schedule II
<TABLE>
<CAPTION>
Name Number of Shares Exercise Price Grant Date
- ---- ---------------- -------------- ----------
<S> <C> <C> <C>
Steven A. Burd 6,708 $17.68 November 8, 1993
2,249 $17.79 May 11, 1994
6,742 $14.23 May 11, 1994
2,007 $19.93 May 3, 1995
6,015 $15.94 May 3, 1995
1,265 $31.62 May 8, 1996
3,798 $25.30 May 8, 1996
James H. Greene, Jr. 6,788 $17.68 November 8, 1993
2,249 $17.79 May 11, 1994
5,618 $14.23 May 11, 1994
2,007 $19.93 May 3, 1995
5,013 $15.94 May 3, 1995
1,265 $31.62 May 8, 1996
3,165 $25.30 May 8, 1996
Robert I. MacDonnell 7,260 $27.55 May 13, 1992
1,828 $21.89 May 5, 1993
4,569 $17.51 May 5, 1993
2,249 $17.79 May 11, 1994
5,618 $14.23 May 11, 1994
2,007 $19.93 May 3, 1995
5,013 $15.94 May 3, 1995
1,265 $31.62 May 8, 1996
3,165 $25.30 May 8, 1996
Peter A. Magowan 7,260 $27.55 May 13, 1992
6,171 $22.04 May 13, 1992
1,828 $21.89 May 5, 1993
2,741 $17.51 May 5, 1993
2,249 $17.79 May 11, 1994
2,809 $14.23 May 11, 1994
2,007 $19.93 May 3, 1995
2,507 $15.94 May 3, 1995
1,265 $31.62 May 8, 1996
3,165 $25.30 May 8, 1996
</TABLE>
Options are non-transferable except by inheritance upon an optionee's death,
terminate one year after the retirement, disability or death of the optionee,
and are otherwise granted for ten year terms. Options are exercisable in
cumulative 25% installments commencing six months from the date of grant and
continuing on each anniversary of the date of grant thereafter, with full
vesting
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occurring on the third anniversary date. Vesting may be accelerated in
certain events relating to changes in control of the Company, unless there is a
surviving corporation that shall assume (with appropriate changes) the
outstanding options or replace them with new options of comparable value.
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EXHIBIT INDEX
Exhibit 1 Joint Filing Agreement dated as of November 9, 1993, which was
filed as Exhibit 99.1 to Amendment No. 9 to the Schedule 13D
filed on November 10, 1993 by the Reporting Persons and is
incorporated by reference herein.
Exhibit 2 Letter from Safeway to the Company dated October 30, 1996.
Exhibit 3 Press Release dated October 30, 1996.
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EXHIBIT 2
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, CA 94588
October 30, 1996
Board of Directors VIA FACSIMILE
The Vons Companies, Inc.
618 Michillinda Avenue
Arcadia, CA 91007
Gentlemen:
The Board of Directors and management of Safeway have determined that a business
combination of our companies would be extremely beneficial to the shareholders
of both Vons and Safeway. To that end, I am writing to advise you that Safeway
is hereby proposing a stock-for-stock merger in which each share of Vons common
stock not owned by Safeway would be exchanged, tax-free, for 1.34 shares of
Safeway common stock which, based on the closing price of Safeway stock on
October 29, 1996, would have a value in excess of $58 per Vons share.
We believe that our proposed exchange ratio represents a compelling price for
your shareholders. Based on current prices for Safeway stock, the value of our
proposal reflects multiples of EBITDA and net income that are among the highest
ever paid in an acquisition of this type in our industry. Through the second
quarter, the proposal represents multiples of trailing 12-month EBITDA and net
income of 9.9x and 33.5x, respectively. The value of our proposal is
approximately 30% higher than the highest price at which Vons common stock has
ever traded, and represents a 35% premium over the closing stock price for Vons
common stock on October 29, 1996.
A combination of Safeway and Vons would offer a number of substantial benefits:
- - The combination of Safeway and Vons would result in the second largest
grocery store chain in North America, with 1,375 stores, operations in 16
states, the District of Columbia and five Canadian provinces and sales in
excess of $22.5 billion. The combined company would have the number one or
number two market share in each of its ten operating regions. The business
combination would result in your shareholders' diversifying their
investment and no longer being vulnerable solely to economic and other
factors that affect Southern California. The combined company would have
the largest market capitalization in the industry, resulting in a larger
and more liquid public market for your shareholders.
- - Safeway is a growth company. Safeway's same store sales growth has
exceeded 3.0% in each of the last 13 quarters. In addition, Safeway's same
store sales growth has led the industry
16
<PAGE> 2
Board of Directors
October 30, 1996
Page Two
based on comparisons over periods of two years, three years and four
years. Combining our sales growth strategy with the programs that Vons has
successfully implemented under the leadership of Vons' management team
would place our combined companies at the forefront of the industry.
- - Safeway is recognized as an industry leader in controlling costs and has
achieved significant improvements in its returns on its capital
investments. Our efforts to reduce or control costs have resulted in a
year-over-year decline of operating and administrative costs as a
percentage of sales for 14 consecutive quarters. No other major operator in
our industry has come close to matching that achievement.
- - At the same time, Safeway has had a significant increase in jobs and
employee hours at Safeway's stores and would anticipate having the same
experience with Vons. A successful implementation of this growth strategy
at Vons should mean a continued increase in jobs at Vons stores. In
addition, it is our intention that following the transaction, Vons will
maintain offices in Arcadia and the stores will continue to operate under
the "Vons" name.
It is our strong preference to work with you toward a negotiated transaction. To
that end, Safeway will not acquire additional shares of Vons common stock except
on a basis offered to all of your shareholders. In any event, we want you to
know that we are fully committed to completing this transaction.
We look forward to meeting with you as soon as possible to discuss the terms of
the transaction we have proposed. We are confident that such a transaction is in
the best interests of both of our companies, and their respective shareholders,
customers, employees and communities. We are committed to working with you to
negotiate and sign a definitive agreement and to complete this transaction as
soon as practicable thereafter. As required under federal securities laws, this
proposal is being made public through a Schedule 13D filing with the SEC, and we
have issued a press release to facilitate dissemination of the information in
this letter.
Although we understand that you will need some time to consider carefully our
proposal, we would appreciate hearing from you within two weeks regarding your
willingness to negotiate the terms of our proposal.
Very truly yours,
Steven A. Burd
President and Chief Executive
Officer
17
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EXHIBIT 3
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, CA 94588
October 30, 1996
FOR IMMEDIATE RELEASE
Melissa Plaisance
(510) 467-3136
Safeway Inc. (SWY) announced today that it has proposed a business combination
to the Board of Directors of The Vons Companies Inc. (VON). The proposal calls
for Safeway to issue 1.34 Safeway shares for each of the Vons shares not
currently owned by Safeway. Based on yesterday's closing share price for
Safeway, this proposal equates to a value in excess of $58.00 per Vons share,
and values Vons at approximately $3.25 billion, including outstanding
indebtedness. The letter reflecting Safeway's proposal which was sent to the
Board of Directors of Vons is attached.
"The merger of these two companies will allow us to create a truly great
company. We will be able to utilize the best of both companies and improve
operational practices, systems, category management, procurement and private
label," said Steve Burd, President and CEO of Safeway Inc. "The combination with
this leading Southern California food retailer will enable both companies to
diversify their geographic reach in adjacent markets and provide us with
mutually beneficial opportunities."
The Vons Companies Inc. is one of the largest food retailers in Southern
California. The Company operates 325 stores under the names Vons and Pavilions.
Safeway currently owns 34.5% of the outstanding Vons shares.
Safeway Inc. is one of the world's largest food retailers, operating 1,050
stores in the United States and Canada. The company's common stock is traded on
the New York Stock Exchange and the Pacific Stock Exchange under the symbol SWY.
* * *
This press release is not an offer to sell or the solicitation of an offer to
buy any securities of Safeway or Vons, and no such offer, solicitation or sale
will be made except in compliance with applicable securities laws.
18
