Safeway Launches Bid To Buy Vons Deal Would Give No. 2 Grocer Entry To Southern California

Safeway Inc. on Wednesday proposed buying Southern California grocery chain Vons Companies Inc., solidifying its position as the second-largest supermarket company in North America.

News of the offer, which values Vons at about $3.25 billion including its debt, pushed the company’s stock up more than 25 percent. Vons said in a statement a committee of its directors would study the proposal.

Safeway chief executive Steve Burd told reporters that under his plan Vons would continue to operate under its own name as a division of Safeway. Already the second-largest by revenue, the new Safeway would still rank behind Cincinnati-based Kroger Co.

Safeway operates 1,050 stores in the United States and Canada. Vons’ 325 stores would bring Safeway back to Southern California, a market the company left eight years ago when it sold 172 stores to Vons. Vons also has stores in Nevada.

Vons, which also operates Pavilions markets, is California’s No. 2 grocery chain behind Ralphs.

The combination would result in a chain through 16 states, the District of Columbia and five Canadian provinces, with sales in excess of $22.5 billion, Safeway said in a letter to Vons’ board of directors.

Vons would keep its Arcadia headquarters, and Burd said layoffs didn’t form a big part of the plan. Safeway over the past four years actually has added 8,000 employees, Burd said.