PENN TRAFFIC TO SELL SANI-DAIRY TO DEAN

SYRACUSE, N.Y. -- Penn Traffic Co. here said last week it plans to sell its Sani-Dairy division to Dean Foods Co., Franklin Park, Ill., for $37.5 million in cash.

said once the transaction has been completed it would begin a 10-year supply agreement with Dean Foods for purchases of products currently supplied by Sani-Dairy and two other dairies. Sani-Dairy is expected to have revenues of approximately $65 million (primarily intercompany sales) for the fiscal year ending Jan. 31, 1998.

Penn Traffic expects to record a gain of approximately $25 million (pretax) upon the completion of the transaction, and the company expects that the divestiture of the Sani-Dairy division would be accretive to its future earnings.

Proceeds from the sale, which is subject to regulatory approvals, would be used to reduce indebtedness and for general corporate purposes.

Dean Foods has agreed to offer employment to all current Sani-Dairy employees.