Kroger to Bid on Dominick's?

The Kroger Co. (Cincinnati) is reportedly ready to make a bid on Dominick's Finer Foods, 113-unit Chicago-based subsidiary of Safeway Inc. (Pleasanton, Calif.).

Safeway said in November 2002 that it expected to sell Dominick's within six months and that potential buyers included Kroger and Supervalu (Minneapolis).

As the six-month window closes, some analysts now think that Kroger is poised to make a bid, which would allow the nation's largest grocery retailer to extend its reach into one of the few major Midwest markets where it doesn't have a big footprint. Kroger operates three Food 4 Less warehouse-style supermarkets the Chicago area and plans to open two to five additional Food 4 Less stores this year.

Dominick's holds the No. 2 position among Chicago-area grocers, behind Jewel-Osco, despite seeing its sales slide in recent years. But the speculation is that Kroger could probably buy the regional chain for considerably less than the $1.2 billion Safeway paid for it in 1998, largely because of the labor union issues that led Safeway to put Dominick's on the auction block in the first place. Safeway agreed to extend Dominick's workers' contracts and look for a buyer who would recognize their union after contract negotiations stalled and the workers threatened to strike last year.