Safeway is negotiating the sale of its stores in Southern California to Vons Grocery Co., sources close to both companies said Wednesday.
Industry sources said not all of the 244 stores in Safeway's Southern California division would necessarily become part of Vons. As many as 50 stores could be closed and others sold, sources said.
Such a sale would also intensify the supermarket war in Southern California and perhaps give Vons an edge in its battle with Ralphs for first place.
As recently as July, officials at Oakland-based Safeway said the chain intended to keep its operations in both Northern and Southern California. But Wednesday, Safeway spokeswoman Felicia del Campo said the company's policy is not to discuss possible negotiations. "We're not commenting one way or the other," she said.
Officials of Vons, based in El Monte, also declined to comment.
Industry analysts and real estate sources for months have heard rumors of a pending sale of Safeway's Southern California division.
One prominent developer said that "someone very, very high up in Safeway" told him that the asking price for the chain's Southern California division was $500 million--a figure some industry sources characterized as too high.
Vons is said to be negotiating a stock swap of up to half its outstanding shares for Safeway's Southern California division, industry sources said.
Safeway is the world's largest supermarket chain, operating 1,682 stores in the United States and Canada. The company was the subject of a $4.2-billion acquisition in November, 1986, by Kohlberg Kravis Roberts & Co., which agreed to buy the grocery chain to thwart a hostile takeover.
Rumors of a possible sale heated up last month when it became known among developers that Safeway and Kohlberg Kravis plan to form a real estate division to dispose of 720 Safeway stores throughout the United States.
The president of a major real estate development firm in Beverly Hills confirmed Wednesday that he has agreed to head the new division, but he asked not to be identified for personal reasons.