YUCAIPA, MANAGEMENT PURCHASE DOMINICK'S

ELLIOT ZWIEBACH

NORTHLAKE, Ill. -- After months of industry speculation, Dominick's Finer Foods here has been acquired by an investment group that includes Yucaipa Cos., Los Angeles, and members of the chain's senior management team. The 100-store privately held chain was sold by the DiMatteo family for a reported price of $750 million, including assumption of debt. All financing will be private.

The acquisition will give Yucaipa a sales base of about $9.25 billion, including $2.5 billion from Dominick's; $5.5 billion from the merger of Food 4 Less Supermarkets, La Habra, Calif., and Ralphs Grocery Co., Compton, Calif., scheduled to occur early next month; $650,000 from Smitty's Super Valu, Phoenix; $300,000 from a group of northern California stores, and $300,000 from Falley's, Topeka, Kan.

With the addition of Dominick's -- and assuming the Food 4 Less-Ralphs merger goes through -- Yucaipa becomes the seventh-largest retailer in the country.

Three top Dominick's executives will relinquish their posts: James DiMatteo, chairman and chief executive officer; Dan Josephs,

president and chief operating officer, and Rick Weber, chief financial officer.

Succeeding them will be Ron Burkle, managing director of Yucaipa, as chairman and chief executive officer; Robert A. Mariano, Dominick's senior vice president, marketing, merchandising and procurement, as president and chief operating officer, and Darren Karst, a principal in Yucaipa, as chief financial officer.

Mariano, 45, who has been with Dominick's for 22 years, said the company will remain locally managed and firmly committed to its Chicago roots.

"While our ownership structure will change, we will carry on the heritage reflected in the Dominick's name and maintain the principles of quality and customer service that enabled the company to grow to this point," Mariano said.

Dominick's controls 27% to 28% of the Chicago market, exceeded only by Jewel Food Stores, Melrose Park, Ill., with about 35%.

The DiMatteo family, which founded Dominick's 70 years ago, will maintain a minority interest in the company. DiMatteo expressed confidence about Dominick's future under new ownership. "We have a seasoned management team who understands our company and the place it holds in our consumers' lives," DiMatteo said. "I am confident they will continue to build the company, and do it faster and take it further, than we could have before."

Burkle said Dominick's will accelerate new-store development and modernization of existing stores.

He said he did not anticipate any effect on employment. "In fact, the chain's future expansion will offer greater opportunities for current employees and suppliers and the potential for increased employment," Burkle said.

Observers told SN they expect Yucaipa to look for buying advantages to leverage the $9 billion-plus sales base it controls.

"Given its major market-share positions in southern California, Phoenix and now Chicago, Yucaipa will have to consider coordinating some of its major purchases," one observer said.

"Ralphs, Smitty's and Dominick's are separate, and they will remain separate, but Yucaipa needs to see if there are any advantages to working with suppliers to coordinate its buying efforts -- not by centralizing purchases, as American Stores is doing, but by working together to maximize its buying clout and bringing it up to new levels."