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Safeway buys Dominick's
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October 13, 1998: 10:01 a.m. ET
Supermarket giant pays $1.2 billion, will assume $646.2 million in debt
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NEW YORK (CNNfn) - Safeway Inc. announced Tuesday it would acquire Dominick's Supermarkets, Inc. in a cash deal valued at more than $1.8 billion.
Under the agreement, Safeway will buy all of Northlake, Ill.-based Dominick's outstanding shares for $49 each. In addition, Safeway will assume $646.2 million in debt.
The acquisition will be accounted for as a purchase and is expected to be funded with bank debt, public debt and the issuance of bonds.
The deal is not expected to affect Pleasanton, Calif.-based Safeway's earnings in the first year, after which it should be a plus, the company said.
"This transaction provides an outstanding opportunity for Safeway to continue on its growth path, while allowing us to enter the Chicago market for the first time," Steve Burd, Safeway's chairman, president and CEO, said.
Dominick's is the second largest supermarket operator in the Greater Chicago Metropolitan area, with annual revenues of $2.6 billion.
The transaction, which was unanimously approved by Dominick's board of directors, is subject to the usual regulatory approval.
The combined company will operate more than 1,490 stores in 18 states in the United States and in Western Canada, with pro forma 1998 estimated annual sales over $26.5 billion.
Shares of Safeway (SWY) jumped 1/4 to 41-7/16 Monday, while Dominick's (DFF) stock gained 1-13/16 to 41-3/8. 
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