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SuperValu to buy Dominick's for $480 million, reports say

SuperValu will soon be the owner of troubled Chicago grocery chain Dominick's, according to this weekend's Crain's Chicago Business, which cited unnamed insiders as sources. The sale is expected to close at the end of the month. Currently owned by Safeway Inc., Dominick's history includes a legacy of disruptive battles with labor unions and the 113-store chain lost $34 million net in first quarter 2003.

Minneapolis-based SuperValu, already a Chicago presence with 24 area Cub stores, has been discussed as a potential suitor for Dominick's since it went on the block in November 2002. But it had some strong competition from a rumored joint venture between Pewaukee, Wisc.-based Roundy's, purveyor of Pick 'n Save stores, and Yucaipa, the private equity vehicle of billionaire Ronald Burkle, says Deutsche Bank Securities analyst Edouard Aubin.

But Roundy recently announced plans to spend its acquisition dollars on 31 Rainbow stores in Minneapolis, leaving Yucaipa out in the cold and allowing SuperValu to step up and bid. Safeway acquired Dominick's in 1998 for $1.7 billion, including $500 million in assumed debt and had been asking $700 million from suitors. Aubin expects SuperValu will pay $480 million based on 2002 sales and EBITDA.

Most Dominick's stores anchor suburban neighborhood centers, mostly owned by private developers. The chain currently holds a 22.3 percent market share in Chicago.

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