-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DKOvkeeTEMY2FGwkahhj0QKuD1ORnu+Kvb9cXF8wi9JhtNKQrllqe5IBJt90tpyW 0x/1bTg1OBDQKt+QhXqNNw== 0000950149-96-001669.txt : 19961031 0000950149-96-001669.hdr.sgml : 19961031 ACCESSION NUMBER: 0000950149-96-001669 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961030 SROS: NYSE SROS: PSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: VONS COMPANIES INC CENTRAL INDEX KEY: 0000715633 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 381623900 STATE OF INCORPORATION: MI FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-36887 FILM NUMBER: 96650386 BUSINESS ADDRESS: STREET 1: 618 MICHILLINDA AVE CITY: ARCADIA STATE: CA ZIP: 91007 BUSINESS PHONE: 8188217000 MAIL ADDRESS: STREET 1: 618 MICHILLINDA AVENUE CITY: ARCADIA STATE: CA ZIP: 91007 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED SUPERMARKETS INC /MI//NEW/ DATE OF NAME CHANGE: 19870805 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SAFEWAY INC CENTRAL INDEX KEY: 0000086144 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 943019135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: FOURTH & JACKSON ST CITY: OAKLAND STATE: CA ZIP: 94660 BUSINESS PHONE: 5108913000 MAIL ADDRESS: STREET 1: FOURTH & JACKSON ST CITY: OAKLAND STATE: CA ZIP: 94660 FORMER COMPANY: FORMER CONFORMED NAME: SAFEWAY STORES INC DATE OF NAME CHANGE: 19900226 SC 13D/A 1 SCHEDULE 13D 1 [LATHAM & WATKINS LETTERHEAD] October 30, 1996 VIA EDGAR Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: THE VONS COMPANIES, INC. Ladies and Gentlemen: Pursuant to Rule 13d-2 and on behalf of Safeway Inc., Safeway Southern California, Inc. and Safeway U.S. Holdings, Inc. (the "Reporting Persons"), we hereby file with the Securities and Exchange Commission (the "Commission") via EDGAR the enclosed Amendment No. 10 to Schedule 13D filed by the Reporting Persons which amends the Schedule 13D filed September 16, 1988 relating to the Common Stock of The Vons Companies, Inc. A copy of Amendment No. 10 to the Schedule 13D has also been sent by certified mail to the principal executive office of The Vons Companies, Inc. and by Federal Express to the New York Stock Exchange. Please contact the undersigned at (415) 395-8131 with any questions. Very truly yours, /s/ Laura L. Gabriel Laura L. Gabriel of LATHAM & WATKINS Enclosures cc: The Vons Companies, Inc. New York Stock Exchange 2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------------------- SCHEDULE 13D (Amendment No. 10) Under the Securities Exchange Act of 1934 THE VONS COMPANIES, INC. ------------------ (Name of issuer) Common Stock, Par Value $.10 Per Share --------------------------- (Title of class of securities) 928869-10-6 ----------- (CUSIP number) Michael C. Ross, Esq. Senior Vice President Safeway Inc. 5918 Stoneridge Mall Road Pleasanton, California 94588 (510) 467-3000 ---------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) COPY TO: Scott R. Haber Latham & Watkins 505 Montgomery Street, Suite 1900 San Francisco, California 94111 (415) 391-0600 October 30, 1996 -------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this statement because of Rule 13d-1(b)(3) or (4), check the following box: [ ] Check the following box if a fee is being paid with the statement: [ ] Page 1 of 18 Pages Exhibit Index is on Page 15 3 SCHEDULE 13D CUSIP No. 928869-10-6 1. Name of Reporting Person Safeway Southern California, Inc. 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [ ] 3. SEC Use Only 4. Source of Funds AF 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6. Citizenship or Place of Organization Delaware 7. Sole Voting Power -0- Number of Shares 8. Shared Voting Power Beneficially 15,126,000 Owned By Each Reporting 9. Sole Dispositive Power Person -0- With 10. Shared Dispositive Power 15,126,000 11. Aggregate Amount Beneficially Owned by Each Reporting Person 15,126,000 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13. Percent of Class Represented by Amount in Row (11) 34.5% 14. Type of Reporting Person CO 2 4 SCHEDULE 13D CUSIP No. 928869-10-6 1. Name of Reporting Person Safeway Inc. 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [ ] 3. SEC Use Only 4. Source of Funds WC/OO 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6. Citizenship or Place of Organization Delaware 7. Sole Voting Power -0- Number of Shares 8. Shared Voting Power Beneficially 15,126,000 Owned By Each Reporting 9. Sole Dispositive Power Person -0- With 10. Shared Dispositive Power 15,126,000 11. Aggregate Amount Beneficially Owned by Each Reporting Person 15,126,000 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13. Percent of Class Represented by Amount in Row (11) 34.5% 14. Type of Reporting Person CO 3 5 SCHEDULE 13D CUSIP No. 928869-10-6 1. Name of Reporting Person Safeway U.S. Holdings, Inc. 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [ ] 3. SEC Use Only 4. Source of Funds AF 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6. Citizenship or Place of Organization Delaware 7. Sole Voting Power -0- Number of Shares 8. Shared Voting Power Beneficially Owned By 15,126,000 Each Reporting 9. Sole Dispositive Power Person -0- With 10. Shared Dispositive Power 15,126,000 11. Aggregate Amount Beneficially Owned by Each Reporting Person 15,126,000 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13. Percent of Class Represented by Amount in Row (11) 34.5% 14. Type of Reporting Person CO 4 6 This Amendment No. 10 to Schedule 13D ("Amendment No. 10") amends the Statement on Schedule 13D filed September 16, 1988, and all amendments thereto (the "Schedule 13D"), by Safeway Southern California, Inc., a Delaware corporation ("SSCI"), Safeway Inc. (formerly Safeway Stores, Incorporated), a Delaware corporation ("Safeway"), and Safeway U.S. Holdings, Inc., a Delaware corporation ("SUSHI", and together with SSCI and Safeway, the "Reporting Persons"), relating to the Common Stock, par value $.10 per share (the "Shares"), of The Vons Companies, Inc., a Michigan corporation (the "Company"). Capitalized terms used herein and not defined have the same meanings ascribed to them in the Schedule 13D. Item 2. Security and Issuer. Item 2 is hereby amended and restated in its entirety as follows: (a)-(c), (f) This Schedule is being filed by the Reporting Persons. Safeway, directly and through its subsidiaries, is engaged in the retail grocery business and operates related supply and distribution facilities. SUSHI is a direct wholly owned subsidiary of Safeway and holds all of the outstanding shares of certain of Safeway's United States operating subsidiaries. SSCI is a direct wholly owned subsidiary of SUSHI and prior to August 29, 1988 held all of the outstanding shares of certain subsidiaries which operated Safeway's Southern California retail grocery, distribution and supply facilities. SSCI presently holds all of the outstanding shares of certain subsidiaries which operate supply facilities in Southern California. The business address of each of the Reporting Persons is 5918 Stoneridge Mall Road, Pleasanton, California 94588. It is presently contemplated that SUSHI will be merged into Safeway, whereupon its separate existence shall cease. As a result, SSCI will be a direct subsidiary of Safeway. The principal stockholders of Safeway are SSI Associates, L.P., a Delaware limited partnership ("SSI Associates"), and KKR Partners II, L.P., a Delaware limited partnership ("Partners II", and together with SSI Associates, the "Partnerships"). The general partner of the Partnerships is KKR Associates, a New York limited partnership ("KKR Associates"). KKR Associates and Partners II hold, through partnerships, investments in a number of industrial and other companies. The principal business of SSI Associates is to hold the common stock of Safeway. The business address of each of the KKR Associates and the Partnerships is 9 West 57th Street, New York, New York 10019. Schedule I attached hereto lists each executive officer and director of each of the Reporting Persons and the present principal occupation or employment and business address of each such executive officer and director. Schedule I lists each general partner of KKR Associates and the present principal occupation or employment and business address of each such general partner. The information set forth in Schedule I, which is incorporated herein by reference, supersedes in its entirety the information previously listed on Schedule I to the Schedule 13D. (d) and (e). During the last five years, none of the Reporting Persons, nor to the best knowledge of the Reporting Persons, any other person named in this Item 2 or on Schedule I has (i) been convicted in a criminal proceeding (excluding traffic violations or similar 5 7 misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Item 4. Purpose of Transaction. Items 3 and 4 are hereby amended as follows: On October 30, 1996, Safeway submitted a letter to the Board of Directors of the Company, which letter is filed as Exhibit 2 and is incorporated by reference herein (the "Proposal Letter"). The Proposal Letter sets forth Safeway's proposal to enter into a stock-for-stock business combination in which each Share not currently owned by Safeway would be converted into 1.34 shares of Safeway Common Stock, which, based on the closing price of Safeway stock on October 29, 1996 would have a value in excess of $58.00 per Share. As a result of the transaction, the Company would become a wholly owned subsidiary of Safeway. Also, on October 30, 1996, Safeway issued a press release announcing that it had submitted the Proposal Letter. A copy of the press release is filed herewith as Exhibit 3 and is incorporated herein by reference. The Reporting Persons have determined to pursue the proposed business combination to seek to change their position as a minority shareholder in the Company, and intend to take the steps necessary to complete such transaction, which steps may include, but not be limited to, the discussion, negotiation and completion of a merger agreement. There can be no assurance, however, that such transaction will be consummated, or that if it is consummated, that such a transaction will be consummated on the terms set forth in the Proposal Letter. A business combination of the Company and the Reporting Persons would be subject to a number of conditions, including satisfaction of regulatory requirements (including compliance with applicable provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and other conditions. It is anticipated that in order to effect the business combination described herein, Safeway would issue newly issued shares of its common stock. Depending upon the response of the Company's Board of Directors to the Proposal Letter, the Reporting Persons reserve the right to formulate other plans or make other proposals, and take such actions with respect to their investment in the Company, including any or all of the items set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D and any other actions, as they may determine. Other than as described herein, and in furtherance of the proposed business combination, the Reporting Persons have no present plans or proposals which relate to or would result in: (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present Board or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing 6 8 vacancies on the Board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company's business or corporate structure; (vii) changes in the Company's certificate of incorporation or by-laws or other actions which may impede the acquisition of control of the Company by any persons; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (x) any action similar to those enumerated above. Item 5. Interest in Securities of the Issuer. Item 5(a) to the Schedule 13D is amended and restated in its entirety as follows: (a) The Reporting Persons beneficially own an aggregate of 15,126,000 Shares, which represents approximately 34.5% of the outstanding Shares (based on 43,822,951 Shares outstanding at July 22, 1996 as reported in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 16, 1996). All of such Shares are held of record by SSCI. The Reporting Persons share the power to vote, or direct the vote, and to dispose or direct the disposition of, all such Shares. Each of Messrs. Burd, Greene, MacDonnell and Magowan is a director of the Company and, as of October 29, 1996, held options to purchase Shares as set forth on Schedule II. Such options were granted pursuant to the Company's Directors' Stock Option Plan. Item 7. Material to be Filed as Exhibits. Exhibit 1 Joint Filing Agreement dated as of November 9, 1993, which was filed as Exhibit 99.1 to Amendment No. 9 to the Schedule 13D filed on November 10, 1993 by the Reporting Persons and is incorporated by reference herein. Exhibit 2 Letter from Safeway to the Company dated October 30, 1996. Exhibit 3 Press Release dated October 30, 1996. 7 9 SIGNATURE After reasonable inquiry and to the best of each of the undersigned's knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: October 30, 1996 SAFEWAY INC. By: /s/ Michael C. Ross ------------------- Name: Michael C. Ross Title: Senior Vice President - General Counsel Dated: October 30, 1996 SAFEWAY SOUTHERN CALIFORNIA INC. By: /s/ Michael C. Ross ------------------- Name: Michael C. Ross Title: Vice President Dated: October 30, 1996 SAFEWAY U.S. HOLDINGS, INC. By: /s/ Michael C. Ross ------------------- Name: Michael C. Ross Title: Vice President 8 10 SCHEDULE I Executive Officers and Directors of Corporate Reporting Persons The following are the directors and executive officers of each of Safeway Inc., Safeway U.S. Holdings, Inc. and Safeway Southern California, Inc. Unless otherwise indicated, the principal occupation or employment of each of such persons is the position that such person holds with Safeway, the business address of each of such persons is c/o Safeway, 5918 Stoneridge Mall Road, Pleasanton, California 94588 and each is a United States citizen. Safeway Inc. Directors Peter A. Magowan, Chairman Steven A. Burd Sam Ginn James H. Greene, Jr. Paul Hazen Henry R. Kravis Robert I. MacDonnell George R. Roberts Michael T. Tokarz The business address of Mr. Ginn is 1 California Street, 30th Floor, San Francisco, California 94111. Mr. Ginn is Chairman of the Board and Chief Executive Officer of AirTouch Communications, Inc., a worldwide wireless telecommunications company. The business address of Mr. Hazen is 420 Montgomery Street, San Francisco, California 94163. Mr. Hazen is Chairman of the Board and Chief Executive Officer of Wells Fargo & Company and its principal subsidiary, Wells Fargo Bank, National Association, a commercial bank. The business addresses and principal occupations of Messrs. Greene, Kravis, MacDonnell, Roberts and Tokarz are set forth below under "General Partners of KKR Associates." The business address of Mr. Magowan is 3Com Park at Candlestick Point, San Francisco, California 94124. Mr. Magowan is Managing General Partner and President of the San Francisco Giants, a baseball organization. Executive Officers Steven A. Burd President & Chief Executive Officer Kenneth W. Oder Executive Vice President, Labor Relations, Human Resources, Law and Public Affairs Julian C. Day Executive Vice President and Chief Financial Officer E. Richard Jones Executive Vice President, Supply Operations 9 11 Frithjof J. Dale Group Vice President, Finance David T. Ching Senior Vice President and Chief Information Officer Diane Peck Senior Vice President, Human Resources Melissa C. Plaisance Senior Vice President, Finance and Public Affairs Larree M. Renda Senior Vice President, Corporate Retail Operations Michael C. Ross Senior Vice President, Secretary and General Counsel Gary D. Smith Senior Vice President and Director of Marketing Donald P. Wright Senior Vice President, Real Estate and Engineering George D. Marshall Vice President, Labor Relations Richard A. Wilson Vice President, Tax The business address of Mr. Jones is c/o Safeway Inc., 2800 Ygnacio Valley Road, Walnut Creek, California 94598. Mr. Wright is a citizen of Canada. Mr. Day is a citizen of the United Kingdom. Safeway U.S. Holdings, Inc. Directors Steven A. Burd Julian C. Day Kenneth W. Oder Executive Officers Frithjof J. Dale President Michael C. Ross Vice President, Secretary & Treasurer Dennis J. Dunne Vice President Harvey K. Naito Vice President 10 12 Donald B. Shaw Vice President Richard A. Wilson Vice President Donald P. Wright Vice President Safeway Southern California, Inc. Directors Frithjof J. Dale Harvey K. Naito Michael C. Ross Executive Officers Frithjof J. Dale President Michael J. Boylan Vice President Dennis J. Dunne Vice President Harvey K. Naito Vice President and Treasurer Michael C. Ross Vice President and Secretary Donald B. Shaw Vice President Richard A. Wilson Vice President Donald P. Wright Vice President General Partners of KKR Associates The following are the names and business addresses of the general partners of KKR Associates, each of whom is a United States citizen. Messrs. Kravis and Roberts are also the members of the executive committee of KKR Associates. The present principal occupation or employment of each of such general partners is as a member of KKR & Co. L.L.C., a Delaware limited liability company that is the general partner of Kohlberg Kravis Roberts & Co. L.P. ("KKR"), a private investment firm. Henry R. Kravis George R. Roberts Robert I. MacDonnell Paul E. Raether 11 13 Michael W. Michelson James H. Greene, Jr. Michael T. Tokarz Edward A. Gilhuly Perry Golkin Clifton S. Robbins Scott Stuart The business address of Messrs. Kravis, Raether, Tokarz, Golkin, Robbins and Stuart is 9 West 57th Street, New York, New York 10019. The business address of Messrs. Roberts, MacDonnell, Michelson, Greene and Gilhuly is 2800 Sand Hill Road, Menlo Park, California 94025. 12 14 Schedule II
Name Number of Shares Exercise Price Grant Date - ---- ---------------- -------------- ---------- Steven A. Burd 6,708 $17.68 November 8, 1993 2,249 $17.79 May 11, 1994 6,742 $14.23 May 11, 1994 2,007 $19.93 May 3, 1995 6,015 $15.94 May 3, 1995 1,265 $31.62 May 8, 1996 3,798 $25.30 May 8, 1996 James H. Greene, Jr. 6,788 $17.68 November 8, 1993 2,249 $17.79 May 11, 1994 5,618 $14.23 May 11, 1994 2,007 $19.93 May 3, 1995 5,013 $15.94 May 3, 1995 1,265 $31.62 May 8, 1996 3,165 $25.30 May 8, 1996 Robert I. MacDonnell 7,260 $27.55 May 13, 1992 1,828 $21.89 May 5, 1993 4,569 $17.51 May 5, 1993 2,249 $17.79 May 11, 1994 5,618 $14.23 May 11, 1994 2,007 $19.93 May 3, 1995 5,013 $15.94 May 3, 1995 1,265 $31.62 May 8, 1996 3,165 $25.30 May 8, 1996 Peter A. Magowan 7,260 $27.55 May 13, 1992 6,171 $22.04 May 13, 1992 1,828 $21.89 May 5, 1993 2,741 $17.51 May 5, 1993 2,249 $17.79 May 11, 1994 2,809 $14.23 May 11, 1994 2,007 $19.93 May 3, 1995 2,507 $15.94 May 3, 1995 1,265 $31.62 May 8, 1996 3,165 $25.30 May 8, 1996
Options are non-transferable except by inheritance upon an optionee's death, terminate one year after the retirement, disability or death of the optionee, and are otherwise granted for ten year terms. Options are exercisable in cumulative 25% installments commencing six months from the date of grant and continuing on each anniversary of the date of grant thereafter, with full vesting 13 15 occurring on the third anniversary date. Vesting may be accelerated in certain events relating to changes in control of the Company, unless there is a surviving corporation that shall assume (with appropriate changes) the outstanding options or replace them with new options of comparable value. 14 16 EXHIBIT INDEX Exhibit 1 Joint Filing Agreement dated as of November 9, 1993, which was filed as Exhibit 99.1 to Amendment No. 9 to the Schedule 13D filed on November 10, 1993 by the Reporting Persons and is incorporated by reference herein. Exhibit 2 Letter from Safeway to the Company dated October 30, 1996. Exhibit 3 Press Release dated October 30, 1996. 15 EX-2 2 LETTER FROM SAFEWAY TO THE COMPANY 1 EXHIBIT 2 Safeway Inc. 5918 Stoneridge Mall Road Pleasanton, CA 94588 October 30, 1996 Board of Directors VIA FACSIMILE The Vons Companies, Inc. 618 Michillinda Avenue Arcadia, CA 91007 Gentlemen: The Board of Directors and management of Safeway have determined that a business combination of our companies would be extremely beneficial to the shareholders of both Vons and Safeway. To that end, I am writing to advise you that Safeway is hereby proposing a stock-for-stock merger in which each share of Vons common stock not owned by Safeway would be exchanged, tax-free, for 1.34 shares of Safeway common stock which, based on the closing price of Safeway stock on October 29, 1996, would have a value in excess of $58 per Vons share. We believe that our proposed exchange ratio represents a compelling price for your shareholders. Based on current prices for Safeway stock, the value of our proposal reflects multiples of EBITDA and net income that are among the highest ever paid in an acquisition of this type in our industry. Through the second quarter, the proposal represents multiples of trailing 12-month EBITDA and net income of 9.9x and 33.5x, respectively. The value of our proposal is approximately 30% higher than the highest price at which Vons common stock has ever traded, and represents a 35% premium over the closing stock price for Vons common stock on October 29, 1996. A combination of Safeway and Vons would offer a number of substantial benefits: - - The combination of Safeway and Vons would result in the second largest grocery store chain in North America, with 1,375 stores, operations in 16 states, the District of Columbia and five Canadian provinces and sales in excess of $22.5 billion. The combined company would have the number one or number two market share in each of its ten operating regions. The business combination would result in your shareholders' diversifying their investment and no longer being vulnerable solely to economic and other factors that affect Southern California. The combined company would have the largest market capitalization in the industry, resulting in a larger and more liquid public market for your shareholders. - - Safeway is a growth company. Safeway's same store sales growth has exceeded 3.0% in each of the last 13 quarters. In addition, Safeway's same store sales growth has led the industry 16 2 Board of Directors October 30, 1996 Page Two based on comparisons over periods of two years, three years and four years. Combining our sales growth strategy with the programs that Vons has successfully implemented under the leadership of Vons' management team would place our combined companies at the forefront of the industry. - - Safeway is recognized as an industry leader in controlling costs and has achieved significant improvements in its returns on its capital investments. Our efforts to reduce or control costs have resulted in a year-over-year decline of operating and administrative costs as a percentage of sales for 14 consecutive quarters. No other major operator in our industry has come close to matching that achievement. - - At the same time, Safeway has had a significant increase in jobs and employee hours at Safeway's stores and would anticipate having the same experience with Vons. A successful implementation of this growth strategy at Vons should mean a continued increase in jobs at Vons stores. In addition, it is our intention that following the transaction, Vons will maintain offices in Arcadia and the stores will continue to operate under the "Vons" name. It is our strong preference to work with you toward a negotiated transaction. To that end, Safeway will not acquire additional shares of Vons common stock except on a basis offered to all of your shareholders. In any event, we want you to know that we are fully committed to completing this transaction. We look forward to meeting with you as soon as possible to discuss the terms of the transaction we have proposed. We are confident that such a transaction is in the best interests of both of our companies, and their respective shareholders, customers, employees and communities. We are committed to working with you to negotiate and sign a definitive agreement and to complete this transaction as soon as practicable thereafter. As required under federal securities laws, this proposal is being made public through a Schedule 13D filing with the SEC, and we have issued a press release to facilitate dissemination of the information in this letter. Although we understand that you will need some time to consider carefully our proposal, we would appreciate hearing from you within two weeks regarding your willingness to negotiate the terms of our proposal. Very truly yours, Steven A. Burd President and Chief Executive Officer 17 EX-3 3 PRESS RELEASE DATED OCTOBER 30, 1996 1 EXHIBIT 3 Safeway Inc. 5918 Stoneridge Mall Road Pleasanton, CA 94588 October 30, 1996 FOR IMMEDIATE RELEASE Melissa Plaisance (510) 467-3136 Safeway Inc. (SWY) announced today that it has proposed a business combination to the Board of Directors of The Vons Companies Inc. (VON). The proposal calls for Safeway to issue 1.34 Safeway shares for each of the Vons shares not currently owned by Safeway. Based on yesterday's closing share price for Safeway, this proposal equates to a value in excess of $58.00 per Vons share, and values Vons at approximately $3.25 billion, including outstanding indebtedness. The letter reflecting Safeway's proposal which was sent to the Board of Directors of Vons is attached. "The merger of these two companies will allow us to create a truly great company. We will be able to utilize the best of both companies and improve operational practices, systems, category management, procurement and private label," said Steve Burd, President and CEO of Safeway Inc. "The combination with this leading Southern California food retailer will enable both companies to diversify their geographic reach in adjacent markets and provide us with mutually beneficial opportunities." The Vons Companies Inc. is one of the largest food retailers in Southern California. The Company operates 325 stores under the names Vons and Pavilions. Safeway currently owns 34.5% of the outstanding Vons shares. Safeway Inc. is one of the world's largest food retailers, operating 1,050 stores in the United States and Canada. The company's common stock is traded on the New York Stock Exchange and the Pacific Stock Exchange under the symbol SWY. * * * This press release is not an offer to sell or the solicitation of an offer to buy any securities of Safeway or Vons, and no such offer, solicitation or sale will be made except in compliance with applicable securities laws. 18 -----END PRIVACY-ENHANCED MESSAGE-----