<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-67013
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 10, 1998)
20,000,000 Shares
Safeway Inc.
COMMON STOCK
[SAFEWAY LOGO]
------------------------
The selling stockholders are offering all of the shares, which include
17,014,690 presently outstanding shares and 2,985,310 shares which will be
issued upon the exercise of outstanding warrants.
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Safeway Inc.'s common stock is listed on the New York Stock Exchange under the
symbol "SWY."
On November 12, 1998, the reported last sale price of the common stock on
the New York Stock Exchange was $55 per share.
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The underwriters have agreed to purchase the shares from the selling
stockholders at the closing price of the common stock on the New York Stock
Exchange on November 12, 1998 less $.4125 per share. Based on the reported
closing price of $55 per share for the common stock on the New York Stock
Exchange on November 12, 1998, the aggregate proceeds to the selling
stockholders (including $1,492,655 to be paid to the Company representing the
exercise price of warrants for 2,985,310 shares at $.50 per share) will be
$1,091,750,000.
The underwriters will offer the shares to the public in one or more transactions
at prevailing market prices or at negotiated prices.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on
November 17, 1998.
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MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
WARBURG DILLON READ LLC
November 12, 1998
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Underwriters................................................ S-3
Legal Matters............................................... S-4
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 2
Disclosure Regarding Forward-Looking Statements............. 4
The Company................................................. 5
The Selling Stockholders.................................... 7
Description of Capital Stock and Warrants................... 9
Use of Proceeds............................................. 10
Plan of Distribution........................................ 10
Legal Matters............................................... 11
Experts..................................................... 11
</TABLE>
S-2
<PAGE> 3
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the underwriters
named below have severally agreed to purchase, directly or through the exercise
of warrants, and the selling stockholders have severally agreed to sell to them,
the respective number of shares of the Company's common stock set forth opposite
the names of such underwriters below:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- -----------
<S> <C>
Morgan Stanley & Co. Incorporated........................... 9,000,000
Goldman, Sachs & Co......................................... 4,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 4,000,000
Warburg Dillon Read LLC..................................... 3,000,000
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Total............................................. 20,000,000
===========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the shares of common stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The underwriters are obligated to take
and pay for all of the shares of common stock (directly or through the purchase
and exercise of warrants) offered hereby if any such shares are taken. With
respect to shares of common stock obtained upon the purchase and exercise of
warrants, the underwriters will remit the exercise price of the warrants to the
Company.
The underwriters may sell all or a substantial portion of the shares of
common stock in one or more transactions (which may involve block transactions)
on the New York Stock Exchange (the "NYSE") or on other national securities
exchanges on which the common stock is traded, in negotiated transactions or
otherwise. The underwriters may also distribute shares of common stock from time
to time in special offerings, exchange distributions and/or secondary
distributions pursuant to and in accordance with the rules of the NYSE or other
exchanges, in the over-the-counter market, in negotiated transactions through
the writing of options on the shares of common stock (whether such options are
listed on an options exchange or otherwise), or in a combination of such methods
at prevailing market prices, at prices related to prevailing market prices or at
negotiated prices. The underwriters may execute such transactions by selling
shares of common stock to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or the purchasers of such shares of common stock for whom they
may act as agents or to whom they may sell as principal.
In connection with the sale of the shares of common stock, the underwriters
will receive compensation in the form of commissions or discounts and may
receive compensation from purchasers of the shares of common stock for whom they
may act as agent or to whom they may sell as principal in the form of
commissions or discounts, in each case in amounts which will not exceed those
customary in the types of transactions involved. The underwriters and dealers
that participate in the distribution of the shares of common stock may be deemed
to be underwriters, and any discounts received by them from the selling
stockholders and any compensation received by them on resale of the shares of
common stock by them may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933, as amended.
In order to facilitate the offering of the common stock, the underwriters
may over-allot in connection with the offering, creating a short position in the
common stock for their own account. In addition, to cover over-allotments, the
underwriters may bid for, and purchase, shares of common stock in the open
market. These activities may maintain the market price of the common stock above
independent market levels. The underwriters are not required to engage in these
activities, and may end these activities at any time.
The warrants being purchased by the several underwriters from SSI Equity
Associates, L.P. will be purchased at the closing price of the common stock on
the New York Stock Exchange on November 12, 1998 less $.4125 per underlying
share less the exercise price of $.50 per share for each such warrant. The
S-3
<PAGE> 4
underwriters will immediately exercise such warrants by paying the Company the
aggregate exercise price of the warrants, and will include in the offering the
2,985,310 shares of common stock issued upon such exercise.
The Company, the selling stockholders and the underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
LEGAL MATTERS
Latham & Watkins of San Francisco, California, and Michael C. Ross, our
General Counsel, will issue an opinion about certain legal matters with respect
to the common stock and warrants for Safeway and the selling stockholders.
Certain partners of Latham & Watkins, members of their families, related persons
and others, have an indirect interest, through limited partnerships, in less
than 1% of our common stock. These persons do not have the power to vote or
dispose of such shares of common stock. Michael C. Ross holds common stock and
options to purchase common stock which in the aggregate constitute less than 1%
of our common stock. Brown & Wood LLP of San Francisco will act as counsel for
the underwriters.
S-4
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PROSPECTUS
SAFEWAY INC.
20,000,000 SHARES OF COMMON STOCK
($0.01 PAR VALUE PER SHARE)
This prospectus relates to the offer and sale of up to 20,000,000 shares of
common stock, par value $0.01 per share, of Safeway Inc., a Delaware
corporation. This prospectus also relates to the offer and sale of up to
2,985,310 warrants to purchase common stock and the issuance and sale of
2,985,310 shares of common stock upon the exercise of the warrants. All of the
common stock and warrants being registered may be offered and sold from time to
time by certain of our stockholders. See "The Selling Stockholders" and "Plan of
Distribution." Such shares of common stock include 17,014,690 presently
outstanding shares and 2,985,310 shares to be issued upon the exercise of
outstanding warrants. We will not receive any proceeds from the sale of the
common stock or warrants by the selling stockholders other than $1,492,655
representing the exercise price of the warrants.
Our common stock is traded on the New York Stock Exchange under the symbol
"SWY." On November 6, 1998, the last reported sale price for our common stock
was $50.00 per share.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
November 10, 1998
<PAGE> 6
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained or
incorporated by reference in this Prospectus and any Accompanying Supplement to
this Prospectus. You must not rely upon any information or representation not
contained or incorporated by reference in this Prospectus or any Accompanying
Prospectus Supplement as if we had authorized it. This Prospectus and any
Accompanying Supplement to this Prospectus do not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the registered
securities to which they relate, nor do this Prospectus and any Accompanying
Supplement to this Prospectus constitute an offer to sell or the solicitation of
an offer to buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The
information contained in this Prospectus and any Supplement to this Prospectus
is accurate as of the dates on their covers. When we deliver this Prospectus or
a Supplement or make a sale pursuant to this Prospectus, we are not implying
that the information is current as of the date of the delivery or sale.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Where You Can Find More Information......................... 2
Disclosure Regarding Forward-Looking Statements............. 4
The Company................................................. 5
The Selling Stockholders.................................... 7
Description of Capital Stock and Warrants................... 9
Use of Proceeds............................................. 10
Plan of Distribution........................................ 10
Legal Matters............................................... 11
Experts..................................................... 11
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). You
can inspect and copy these reports, proxy statements and other information at
the public reference facilities of the Commission, in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New
York, New York 10048; and Suite 1400, Citicorp Center, 500 W. Madison Street,
Chicago, Illinois 60661-2511. You can also obtain copies of these materials from
the public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. The
Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission (http://www.sec.gov). You can inspect reports
and other information we file at the office of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
We have filed a registration statement and related exhibits with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
The registration statement contains additional information about us and our
common stock. You may inspect the registration statement and exhibits without
charge at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and you may obtain copies from the Commission at prescribed rates.
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<PAGE> 7
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information. We
incorporate by reference the following documents we filed with the Commission
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"):
- Annual Report on Form 10-K for the year ended January 3, 1998 (including
information specifically incorporated by reference into our Form 10-K
from our 1997 Annual Report to Stockholders and Proxy Statement for our
1998 Annual Meeting of Stockholders) and Form 10-K/A filed March 10,
1998;
- Quarterly Reports on Form 10-Q for the quarters ended March 28, 1998,
June 6, 1998 and September 12, 1998;
- Current Reports on Form 8-K filed on July 15, 1998, October 19, 1998 and
November 9, 1998;
- Description of our common stock contained in our registration statement
on Form 8-A filed with the Commission on February 20, 1990, including the
amendment on Form 8 dated March 26, 1990; and
- All documents filed by us with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and before the offering the common stock thereby is stopped (other than
those portions of such documents described in paragraphs (i), (k), and
(l) of Item 402 of Regulation S-K promulgated by the Commission).
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, California 94588
(925) 467-3790
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
3
<PAGE> 8
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such statements relate to,
among other things, capital expenditures, cost reduction, cash flow and
operating improvements and are indicated by words or phrases such as
"anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. The following factors
are among the principal factors that could cause actual results to differ
materially from the forward-looking statements:
- general business and economic conditions in our operating regions,
including the rate of inflation/deflation, population, employment and job
growth in our markets;
- pricing pressures and other competitive factors, which could include
pricing strategies, store openings and remodels;
- results of our programs to reduce costs;
- the ability to integrate any companies we acquire and achieve operating
improvements at those companies;
- relations with union bargaining units;
- issues arising from addressing year 2000 information technology issues;
- opportunities or acquisitions that we pursue;
- conditions to the acquisitions of Dominick's Supermarkets, Inc. and
Carr-Gottstein Foods Co., including regulatory approval, which could
affect the timing of or ability to complete these acquisitions; and
- the availability and terms of financing.
Consequently, actual events and results may vary significantly from those
included in or contemplated or implied by such statements.
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THE COMPANY
We are currently the second largest food and drug chain in North America
(based on sales), with 1,381 stores at September 12, 1998. There have been
several previously announced mergers or acquisitions in the food retailing
business, including acquisitions we are making and those of our competitors.
After the completion of these transactions, we expect to be the third largest
food and drug chain in North America. Our U.S. retail operations are located
principally in northern California, southern California, Oregon, Washington,
Colorado, Arizona and the Mid-Atlantic region. Our Canadian retail operations
are located principally in British Columbia, Alberta and Manitoba/Saskatchewan.
In support of our retail operations, we have an extensive network of
distribution, manufacturing and food processing facilities.
In April 1997, we completed a merger with The Vons Companies, Inc. ("Vons")
pursuant to which we issued 83.2 million shares of our common stock for all of
the shares of Vons common stock that we did not already own. We also hold a 49%
interest in Casa Ley, S.A. de C.V. which, as of September 12, 1998, operated 75
food and general merchandise stores in western Mexico.
Our principal executive offices are located at 5918 Stoneridge Mall Road,
Pleasanton, California 94588, and our telephone number is (925) 467-3000.
RECENT DEVELOPMENTS
Dominick's Acquisition. On October 13, 1998, we signed a definitive
agreement to acquire all of the outstanding shares of Dominick's Supermarkets,
Inc. ("Dominick's") for $49 cash per share, or a total of approximately $1.2
billion. At August 8, 1998, Dominick's had outstanding approximately $646
million of debt, most of which we will repay in connection with that
transaction.
Dominick's operates 111 stores in the greater Chicago metropolitan area and
had fiscal 1997 revenues of $2.6 billion. Dominick's also owns and operates two
primary distribution facilities and a dairy processing plant.
We commenced a cash tender offer for all of Dominick's outstanding shares
on October 19, 1998, and that tender offer is currently set to expire on
November 16, 1998. Affiliates of The Yucaipa Companies and Apollo Advisors, L.P.
that own approximately 41% of the outstanding shares have agreed to tender their
shares in the tender offer and have granted us options to buy their shares at
$49 cash per share upon termination of the definitive agreement in certain
circumstances. Following the successful completion of the tender offer, the
definitive agreement provides that a wholly owned subsidiary of Safeway will be
merged with Dominick's, with Dominick's surviving as our wholly owned
subsidiary.
The acquisition of Dominick's is subject to a number of conditions,
including the valid tender in the tender offer of a majority of Dominick's
outstanding shares (determined on a fully diluted basis, excluding shares
issuable upon exercise of a warrant held by The Yucaipa Companies), the receipt
of certain regulatory approvals and other customary closing conditions. Although
we cannot assure you that all of these conditions will be satisfied or waived,
we believe we will complete the transaction before the end of 1998.
Carr-Gottstein Acquisition. On August 6, 1998, we signed a definitive
agreement to acquire all of the outstanding shares of Carr-Gottstein Foods Co.
("Carr-Gottstein") for $12.50 per share, or a total of approximately $110
million, in a cash merger transaction. In addition, at June 28, 1998,
Carr-Gottstein had outstanding approximately $224 million of debt, substantially
all of which we will repay in connection with that transaction.
Carr-Gottstein is the leading food and drug retailer in Alaska, with 49
stores (including liquor and tobacco stores) primarily located in Anchorage, as
well as Fairbanks, Juneau, Kenai and other Alaska communities. Carr-Gottstein is
Alaska's highest-volume alcoholic beverage retailer through its chain of 17 wine
and liquor stores operated under the name Oaken Keg Spirit Shops. Carr-Gottstein
also operates seven specialty tobacco stores under the name The Great Alaska
Tobacco Company. In addition, Carr-Gottstein's vertically integrated
organization includes freight transportation operations and a full-line food
warehouse and distribution center.
5
<PAGE> 10
The definitive agreement requires Carr-Gottstein to call a special meeting
of its stockholders where they will be asked to approve the merger of one of our
wholly owned subsidiaries with Carr-Gottstein, with Carr-Gottstein surviving as
our wholly owned subsidiary. An affiliate of Leonard Green & Associates owns
approximately 35% of the outstanding shares and has agreed to vote its shares in
favor of the transaction. Upon completion of the merger, each outstanding
Carr-Gottstein share will be converted into the right to receive $12.50 in cash.
The acquisition of Carr-Gottstein is subject to a number of conditions,
including the approval of a majority of Carr-Gottstein's outstanding shares,
receipt of certain regulatory approvals and other customary closing conditions.
Safeway and Carr-Gottstein have received a request for additional information
from the Federal Trade Commission, and we and Carr-Gottstein are in the process
of compiling information in response to this request. In late October 1998, an
Alaska consumer group and five individuals filed a purported class-action
lawsuit in Alaska state court seeking an injunction to prevent our merger with
Carr-Gottstein. We and Carr-Gottstein believe the lawsuit is without merit and
intend to defend the lawsuit vigorously. Although we cannot assure you that all
of these conditions to the merger will be satisfied or waived, or that this
lawsuit will be resolved to our satisfaction, we believe we will complete the
transaction in early 1999.
Financing the Acquisitions. We intend to finance the acquisitions of
Dominick's and Carr-Gottstein with a combination of bank borrowings and
commercial paper proceeds. On November 9, 1998, we closed the public offering of
$1.4 billion in aggregate principal amount of debt securities. We used most of
the proceeds of that offering to repay outstanding indebtedness under our
commercial paper program and our bank credit agreement.
After we complete these acquisitions, we will operate more than 1,500
stores in 19 states, the District of Columbia and five Canadian provinces. We
intend to continue to focus on three key priorities, (1) controlling costs, (2)
increasing sales and (3) improving capital management, to enhance the
performance of our operations, including the operations of Dominick's and
Carr-Gottstein.
Our sales and net income for 1997 were $22.5 billion and $557.4 million,
respectively. Dominick's had 1997 revenues of $2.6 billion, and Carr-Gottstein's
1997 revenues were $589 million.
Other Acquisitions. Our management believes that the supermarket industry
in North America is fragmented and that there may be opportunities to make other
acquisitions that would enhance our long-term growth. Our criteria for
considering acquisition targets include, but are not limited to, strong market
share and the potential for improving operating cash flow margin. These criteria
are subject to review and modification from time to time. We cannot assure you
that we will complete any such acquisition or that, if completed, the business
acquired will make any contribution to our long-term growth.
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<PAGE> 11
THE SELLING STOCKHOLDERS
All of the shares of common stock are being sold by the selling
stockholders of the Company identified in the following table (including the
footnotes). The table (including the footnotes) also sets forth information
regarding the beneficial ownership of our outstanding common stock as of October
13, 1998 for each of the selling stockholders. Except as indicated by the notes
to the following table, the holders listed below have sole voting power and
investment power over the shares beneficially held by them. The address of SSI
Associates, L.P., KKR Partners II, L.P., KKR Associates, L.P., SSI Equity
Associates, L.P. and SSI Partners, L.P. is 9 West 57th Street, New York, New
York 10019.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES(1) PERCENTAGE(3) SHARES OFFERED
---------- ------------- --------------
<S> <C> <C> <C>
KKR Associates, L.P.(1)...................... 81,352,329 16.7 17,014,690
SSI Equity Associates, L.P.(2)............... 18,376,851 3.6 2,985,310
</TABLE>
- ---------------
(1) The shares are owned by KKR Associates, L.P. ("KKR Associates") and two
limited partnerships, SSI Associates, L.P. ("SSI Associates") and KKR
Partners II, L.P. (the "Common Stock Partnerships"). KKR Associates is the
general partner of each of the Common Stock Partnerships. KKR Associates, in
its capacity as general partner, may be deemed to beneficially own shares
that are owned of record by the Common Stock Partnerships. James H. Greene,
Jr., Henry R. Kravis, Robert I. MacDonnell, George R. Roberts, Edward A.
Gilhuly, Perry Golkin, Michael W. Michelson, Paul E. Raether, Clifton S.
Robbins, Scott Stuart and Michael T. Tokarz are the general partners of KKR
Associates. In their capacity as general partners, they may be deemed to
share beneficial ownership of any shares beneficially owned by KKR
Associates, but disclaim any such beneficial ownership. Messrs. Greene,
Kravis, MacDonnell, and Roberts are members of Safeway's Board of Directors.
The shares offered include 16,068,032 shares being offered by SSI Associates
and 946,658 shares being offered by KKR Partners II, L.P.
(2) SSI Equity Associates, L.P. ("SSI Equity Associates") is a Delaware limited
partnership, the sole general partner of which is SSI Partners, L.P., a
Delaware limited partnership ("SSI Partners"). SSI Partners in its capacity
as general partner, may be deemed to own any shares beneficially owned by
SSI Equity Associates. Messrs. Kravis, MacDonnell, Raether and Roberts, as
general partners of SSI Partners, may be deemed to share beneficial
ownership of any shares beneficially owned by SSI Partners, but disclaim any
such beneficial ownership. Messrs. Kravis, MacDonnell and Roberts are
members of Safeway's Board of Directors. All 18,376,851 shares shown as
beneficially owned by SSI Equity Associates represent shares of common stock
issuable upon exercise of warrants to purchase common stock. In connection
with the offering of shares pursuant to this prospectus, SSI Equity
Associates may sell warrants to purchase 2,985,310 shares of common stock.
Assuming that SSI Equity Associates sells all 2,985,310 shares, SSI Equity
Associates also will transfer to Safeway for cancellation warrants to
purchase 5,421,881 shares of common stock, such warrants representing the
pro rata portion of the warrants that are attributable to the limited
partnership interests held by Safeway. Assuming that SSI Equity Associates
sells all 2,985,310 shares listed above, SSI Equity Associates will hold
warrants to purchase 9,969,660 shares of common stock (of which 6,429,533
shares will be attributable to limited partnership interests held by
Safeway).
(3) Based on 486.2 million shares outstanding at October 13, 1998. For purposes
of calculating the percentage of shares owned by SSI Equity Associates, we
have assumed that SSI Equity Associates has exercised all of the warrants.
Assuming that the Common Stock Partnerships sell all 17,014,690 shares
listed above, the Common Stock Partnerships and KKR Associates will own
64,337,639 shares of common stock, which will represent approximately 13.2% of
our outstanding common stock (based on the shares outstanding at October 13,
1998). The Common Stock Partnerships, KKR Associates, and their general partners
will continue to be able to exercise influence over Safeway through their
representatives, consisting of four of eight members of the Board of Directors,
and to the extent of their voting power with respect to the election of
directors and actions requiring stockholder approval.
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<PAGE> 12
SSI Associates made its investment in Safeway in 1986. The limited
partnership agreement pursuant to which SSI Associates was organized will, by
its terms, expire on December 31, 1998 unless amended by all of the limited
partners to extend the term beyond such date. There can be no assurance that KKR
Associates, the general partner of SSI Associates, will seek such amendments,
or, if sought, that such amendments will be approved by the limited partners. If
such partnership agreement expires, the limited partnership will dissolve. In
the event of the dissolution and winding up of SSI Associates, KKR Associates
will have sole discretion regarding the timing (which may be one or more years
after the expiration of the partnership agreement) and manner of the disposition
of any of our common stock held by such partnership, including public or private
sales of such common stock, the distribution of such common stock to the limited
partners of SSI Associates, or a combination of the foregoing. KKR Associates
will own directly approximately 48 million of the 64.3 million shares referenced
above, following the offerings. Such partnership is not subject to the
termination provisions applicable to SSI Associates.
Safeway, the Common Stock Partnerships, SSI Equity Associates and certain
other parties entered into an agreement dated as of November 25, 1986 (the
"Registration Agreement"), a copy of which is incorporated by reference as an
exhibit to the registration statement of which this prospectus is a part,
pursuant to which we agreed to register the offer and sale of shares of common
stock held by such parties, including the shares of common stock offered hereby,
under the Securities Act, and such parties and we agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act in
connection with the sale of the shares pursuant to the Registration Agreement.
Pursuant to the Registration Agreement, the Common Stock Partnerships and SSI
Equity Associates are required to pay the underwriting discounts and commissions
and transfer taxes, if any, associated with the offerings, and we are required
to pay substantially all expenses directly associated with the offering of
shares hereby, including, without limitation, the cost of registering the shares
offered hereby, including the applicable registration and filing fees, printing
expenses, certain underwriting expenses and applicable expenses for legal
counsel and accountants incurred by us or the Common Stock Partnerships and SSI
Equity Associates.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sales, will have on the market
price of the common stock prevailing from time to time. Sales of substantial
amounts of common stock (including shares issued upon the exercise of stock
options or warrants), or the perception that such sales could occur, could
adversely affect prevailing market prices for the common stock.
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<PAGE> 13
DESCRIPTION OF CAPITAL STOCK AND WARRANTS
GENERAL
Pursuant to our Restated Certificate of Incorporation, as amended (the
"Restated Certificate"), our authorized capital stock consists of 1,500,000,000
shares of common stock, par value $0.01 per share, and 25,000,000 shares of
preferred stock, par value $0.01 per share. At October 13, 1998, Safeway had
outstanding 486.2 million shares of common stock and no outstanding shares of
preferred stock. All shares of common stock are fully paid and nonassessable.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share owned of
record on all matters voted upon by stockholders, and a majority vote is
required for all action to be taken by stockholders. In the event of a
liquidation, dissolution or winding-up of Safeway, the holders of common stock
are entitled to share equally and ratably in our assets, if any, remaining after
the payment of all of our debts and liabilities and the liquidation preference
of any outstanding preferred stock. The common stock has no preemptive rights,
no cumulative voting rights and no redemption, sinking fund or conversion
provisions.
The Restated Certificate provides for a classified board of directors
consisting of three classes as nearly equal in size as practicable. Each class
will hold office until the third annual meeting for election of directors
following the election of such class.
Our By-laws provide for additional notice requirements for stockholder
nominations and proposals at our annual or special meetings. At annual meetings,
stockholders may submit nominations for directors or other proposals only upon
written notice to us at least 50 days prior to the annual meeting.
The common stock is listed on the New York Stock Exchange. The transfer
agent and registrar for the common stock is First Chicago Trust Company of New
York.
PREFERRED STOCK
Our board of directors is authorized without further stockholder action, to
divide any or all shares of the authorized preferred stock into series and to
fix and determine the designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereon, of any series so established, including voting powers,
dividend rights, liquidation preferences, redemption rights and conversion
privileges. As of the date of this prospectus, the board of directors has not
authorized any series of preferred stock and there are no plans, agreements or
understandings for the issuance of any shares of preferred stock.
DIVIDENDS
Holders of common stock are entitled to receive dividends if, as and when
declared by the board of directors out of funds legally available therefor,
subject to the dividend and liquidation rights of any preferred stock that may
be issued and subject to certain limitations in our bank credit agreement.
WARRANTS
Each holder of a warrant is entitled to purchase one share of common stock
at an exercise price of $.50 per share. The warrants were issued in 1986 to SSI
Equity Associates. There are currently outstanding warrants to purchase an
aggregate of 18,376,851 shares of common stock, all of which are held by SSI
Equity Associates. The warrants are exercisable until they expire on November
15, 2001. The exercise price of the warrants is subject to adjustment in the
event we effect a stock dividend, subdivision of stock and certain other
distributions described in the warrant. A copy of the warrant is filed as an
exhibit to the registration statement of which this prospectus is a part and is
incorporated herein by reference. The determination of when or whether to
exercise the warrants is within the sole discretion of the general partner of
SSI Equity Associates,
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except under certain limited circumstances following the sale of common stock by
the Common Stock Partnerships.
USE OF PROCEEDS
The common stock is being sold by the selling stockholders for their own
accounts, and we will not receive any of the proceeds from the sale of the
selling stockholders' common stock or warrants other than $1,492,655
representing the exercise price of the warrants.
PLAN OF DISTRIBUTION
The selling stockholders or their respective pledgees, donees, transferees
or other successors in interest may offer shares of our common stock from time
to time pursuant to this registration statement, depending on market conditions
and other factors, in one or more transactions on the New York Stock Exchange or
other national securities exchanges on which our common stock is traded, in the
over the counter market or otherwise, at market prices prevailing at the time of
sale, at negotiated prices or at fixed prices. SSI Equity Associates also may
sell such shares through the sale and exercise of warrants. Sales of warrants
may be made based on the market prices of the common stock prevailing at the
time of sale (less the exercise price of 50 cents per share), at negotiated
prices or at fixed prices. Common stock and warrants may be offered in any
manner permitted by law, including through underwriters, licensed brokers,
dealers or agents, and directly to one or more purchasers.
Sales of common stock may involve:
- sales to underwriters who will acquire shares of common stock for their
own account and resell them in one or more transactions at fixed prices
or at varying prices determined at time of sale;
- block transactions in which the broker or dealer so engaged may sell
shares as agent or principal;
- purchases by a broker or dealer as principal who resells the shares for
its account;
- an exchange distribution in accordance with the rules of any such
exchange;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
- privately negotiated sales, which may include sales directly to
institutions.
Sales of warrants may involve:
- sales to underwriters who will acquire warrants for their own account,
exercise the warrants and resell the shares of common stock issued upon
exercise in one or more transactions at fixed prices or at varying prices
determined at time of sale;
- block transactions in which the broker or dealer so engaged may acquire
the warrants, exercise the warrants and sell shares of common stock
issued upon exercise as agent or principal;
- purchases by a broker or dealer as principal who exercises the warrants
and sells the shares of common stock issued upon exercise for its
account;
- an exchange distribution in accordance with the rules of any such
exchange;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
- privately negotiated sales, which may include sales directly to
institutions.
Brokers and dealers will receive customary compensation in the form of
underwriting discounts, concessions or commissions from the selling stockholders
and/or purchasers of our common stock in respect of transactions described above
(other than privately negotiated sales). The selling stockholders and any broker
or dealer that participates in the distribution of common stock and warrants may
be deemed to be
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underwriters and any commissions received by them and any profit on the resale
of our common stock positioned by a broker or dealer may be deemed to be
underwriting discounts and commissions under the Securities Act. In the event
the selling stockholders engage an underwriter in connection with the sale of
our common stock or warrants, to the extent required, a prospectus supplement
will be distributed, which will set forth the number of shares of common stock
and warrants being offered and the terms of the offering, including the names of
the underwriters, any discounts, commissions and other items constituting
compensation to underwriters, dealers or agents, the public offering price and
any discounts, commissions or concessions allowed or reallowed or paid by
underwriters to dealers.
In addition, the selling stockholders may, from time to time, sell shares
in transactions under Rule 144 promulgated under the Securities Act.
Certain of the underwriters, brokers, dealers or agents and their
associates may engage in transactions with and perform other services for
Safeway in the ordinary course of their business.
LEGAL MATTERS
Latham & Watkins of San Francisco, California, will issue an opinion about
certain legal matters with respect to the common stock and warrants for Safeway.
Certain partners of Latham & Watkins, members of their families, related persons
and others, have an indirect interest, through limited partnerships, in less
than 1% of our common stock. These persons do not have the power to vote or
dispose of such shares of common stock. Any underwriters will be advised about
the other issues relating to any offering by their own legal counsel.
EXPERTS
Our consolidated financial statements as of January 3, 1998 and December
28, 1996 and for each of the three fiscal years in the period ended January 3,
1998, which are incorporated by reference herein from our Annual Report on Form
10-K for the year ended January 3, 1998, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is also incorporated
by reference herein, and have been so included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
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