KROGER IN THE RING
By William E. Sheeline

(FORTUNE Magazine) – Does this match sound familiar? First round: The value-hunting Herbert Haft family puts a supermarket company in play with an unfriendly offer. Second round: Kohlberg Kravis Roberts comes in with a theatrical roundhouse right, a bid to entice management into a leveraged buyout. The combination decked Safeway Stores and Stop & Shop. Now the opponent is Kroger, which hopes to duck, and stay independent. Kroger, the nation's second-largest grocery chain, with more than 1,300 stores and sales of nearly $18 billion, rejected KKR in favor of its own $4.5 billion restructuring plan, its second retrenchment in two years. The question is, will cash-rich KKR bounce back with a higher offer? Will it go even further and make its first hostile bid ever? (Kroger probably doesn't have to worry about the Hafts. ''Herbert Haft is like a dog chasing a car,'' says one analyst. ''He wouldn't know what to do with one if he caught it.'') KKR is already known for its less than friendly ''bear hug'' buyouts. But the LBO firm has never tried to buy a company directly from stockholders without management's approval. What will happen if KKR steps into out-and-out hostile country? ''If they do, they're going to break up the company more than management proposes,'' says Gary Vineberg, a supermarket industry analyst with Kidder Peabody. Meanwhile, Kroger management says it will pay for its freedom by selling assets worth $333 million, including stores in Florida, the Carolinas, and California, its wholesale warehouses, and some of its food-manufacturing plants. Whoever wins Kroger will get a nice down payment. The employee pension funds are overfunded by $95 million and that money can go toward paying for the victory. - W.E.S.