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Kroger, which operates three Food 4 Less warehouse-style supermarkets in the Chicago area, said yesterday that it will open between two and five more of the format there this year.

However, neither Kroger nor Safeway are commenting on persistent speculation that Kroger plans to make a bid to acquire Dominick’s, the 113-store chain that Safeway owns in Chicago.

Safeway said last November that it hoped to sell Dominick’s in six months; after a labor dispute and declining performance convinced the company it couldn’t make a go of it in the Windy City.
KC's View:
The best thing about acquiring Dominick’s would be that Kroger – or whatever company buys the chain – would likely pay a lot less than the $1.2 billion that Safeway spent to purchase the company. The bad news is that whatever company buys Dominick’s would still have to deal with the unions and what is perceived to be a higher cost structure than Albertsons has in the same market.

There are, at the moment, conflicting opinions about whether Kroger would be able to make a good deal with the unions. We think that getting the unions to help reduce costs at Dominick’s is about as likely as the Chicago Cubs getting to the World Series this year.