Safeway not so safe

Press, 31 July 1986, Page 32

Safeway not so safe

JOHN HUTCHISON,

in San Francisco

Safeway, the world’s largest supermarket chain and a good customer for New Zealand foods, is facing take-over for the first time since it began as a California grocery store. Safeway is a major purchaser of lamb, orange roughy, and fruits and vegetables from New Zealand. It has sent teams of executives to New Zealand since 1982 to look for new items and to consult suppliers. Colossus of the retail food world, Safeway also carries large departments with household wares and remedies, cosmetics, flowers, houseplants, and even some'clothing items. The corporation, which has its world headquarters in starkly ordinary space in an industrial district of nearby

Oakland, has had a disappointing balance sheet recently. It has been trying to fend off a predatory move by Dart Group to buy Safeway for SUS 3.9 billion. Safeway seeks alternatives to keep itself out of Dart’s grasp. Dart is a relatively small set of companies with headquarters in the eastern United States, principally comprising chains of auto parts stores and discount bookshops. Safeway is scrambling to find a so-called "white knight” to rescue it with a friendly take-over, or to engineer either a stock repurchase or a change in corporate structure to make-a take-over diffiCuit. Knowledge that Dart was stalking Safeway and had acquired 5.9 per cent of the company by mid-May drove the stock in two months from SUS 37 a share to more than SUS6O. Dart then sweetened

its offer to SUS 64, a height that would hamper Safeway’s buy-back of enough shares to maintain its independence, at least without selling off substantial assets.

The huge firm, with 170,000 employees and 1957 markets In the United States, 254 in Canada and 127 in Britain, sold its network in Germany, and withdrew from Australia-last year, although the Safeway name is still used there.