Exits: KKR Sells Safeway Shares –

After 14 years of a happy marriage, the affiliates of Kohlberg Kravis Roberts & Co., the New York-based private equity firm, and Safeway Inc., the food and drug retailing giant have begun to step apart from each other. KKR affiliates this month sold 13.1 million shares of Safeway to Morgan Stanley Dean Witter. Terms of the transaction were not disclosed.

KKR affiliates liquidated approximately 8 million of the shares that were acquired by the affiliated partnership in connection with Safeway’s acquisition of Randalls Food Markets last year. “KKR has owned shares of Safeway for 14 years and to the best of my knowledge, this is the first time that they’ve even sold one share of Safeway,” said Melissa C. Plaisance, a senior vice president of finance at Safeway. “This is a final liquidity, but they still hold 25 million shares of Safeway and continue to have an interest in the company.”

Safeway is a Fortune 500 company that had annual sales of $28.9 billion in 1999.

KKR originally acquired Safeway in 1986 for $5.7 billion and since then has taken the company public in 1990 at $11.25 a share and has been instrumental in guiding it through the recession and a slew of acquisitions. In July 1999, KKR sold its 62% stake in Texas grocery chain Randalls Food Market to Safeway for approximately $883 million (BUYOUTS Aug. 16, 1999, p. 4). The firm originally acquired stakes in Randalls Food Markets in 1997 for $225 million.

KKR was founded in 1987 and invests in leveraged acquisitions and management buyouts.