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EXHIBIT 12
October 12, 1998
Board of Directors
Dominick's Supermarkets, Inc.
505 Railroad Avenue
Northlake, IL 60164
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders, other than the stockholders who are affiliates (the
"Public Stockholders"), of Dominick's Supermarkets, Inc. (the "Company") of the
consideration to be received by such stockholders pursuant to the terms of the
Agreement and Plan of Merger, to be dated as of October 13, 1998 (the
"Agreement"), among the Company, Safeway Inc. ("Safeway") and Windy City
Acquisition Corp. ("Merger Sub"), a wholly owned subsidiary of Safeway, pursuant
to which Merger Sub will be merged (the "Merger") with and into the Company.
Pursuant to the Agreement, Merger Sub will commence a tender offer for any
and all outstanding shares of the Company's common stock at a price of $49.00
per share. The tender offer is to be followed by the Merger in which shares of
all stockholders who did not tender will be converted into the right to receive
the same consideration as in the tender offer.
In arriving at our opinion, we have reviewed a draft dated October 12, 1998
of the Agreement and exhibits thereto and a draft dated October 12, 1998 of the
Stockholders Agreement among Safeway, Merger Sub and certain stockholders of the
Company. We also have reviewed financial and other information that was publicly
available or furnished to us by the Company, including information provided
during discussions with the Company's management. Included in the information
provided during discussions with the Company's management were certain financial
projections of the Company for the fiscal years ending October 1998 through
October 2003 prepared by the management of the Company. In addition, we have
compared certain financial and securities data of the Company with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading values of the common stock of the Company, reviewed
prices and premiums paid in certain other business combinations and conducted
such other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by the Company or its
representatives, or that was otherwise reviewed by us. With respect to the
financial projections supplied to us by the management of the Company, we have
assumed that these projections have been reasonably prepared on the basis
reflecting the best currently available estimates and judgments of the
management of the Company as to the future operating and financial performance
of the Company. We have not assumed any responsibility for making an independent
evaluation of any assets or liabilities or for making any independent
verification of any of the information reviewed by us. We have relied as to
certain legal matter on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect our opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not address the relative
merits of the Merger and the other business strategies being considered by the
Company's Board of Directors, nor does it address the Board's decision to
proceed with the Merger. Our opinion does not constitute a recommendation to any
stockholder as to whether to tender in the tender offer of how to vote on the
proposed transaction.
Ex. 12-1
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Board of Directors
Dominick's Supermarkets, Inc.
Page 2
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. DLJ has performed investment
banking and other services for the Company and Safeway in the past and has been
compensated for such services, including most recently: (i) DLJ lead-managed the
Company's initial public offering in October 1996 and (ii) DLJ co-managed
Safeway's $1.1 billion secondary common stock offering in July 1998 and
co-managed Safeway's $1.4 billion secondary common stock offering in December
1997. Certain DLJ employees are limited partners in Yucaipa Chicago Partners,
L.P., a shareholder of the Company. The proportionate ownership of such
employees in such partnership represents an aggregate ownership of less than 1%
of the Company's fully diluted outstanding common stock.
Based upon the foregoing and such other factors as we deem relevant, we are
the opinion that the consideration to be received by the Public Stockholders of
the Company pursuant to the Agreement is fair to such stockholders from a
financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ KENNETH D. MOELIS
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Kenneth D. Moelis
Managing Director
Ex. 12-2