Vons Reports 59% Boost in Profit for Third Quarter

Vons Cos. on Thursday reported a 59% jump in third-quarter profit, a surprisingly strong showing that analysts said validates Safeway Inc.’s unsolicited takeover bid announced the day before.

The sharp profit jump--the latest sign of resurgence at the Arcadia-based company--came as supermarket analysts predicted that Vons will eventually agree to the buyout.

“An acquisition is likely because the price is fair to generous and because Safeway already owns 35% of Vons,” said Jonathan Ziegler, an analyst at the San Francisco offices of Salomon Bros. The $58-a-share offer is a premium of 35% over the pre-offer price of Vons stock.

Vons, operator of the Southland’s No. 2 supermarket chain, has said the Safeway bid will be studied by an as-yet-unnamed committee of its outside directors, which is expected to make a recommendation to the full 12-member board. Vons executives on Thursday did not return phone calls seeking comment.

Four of Vons’ outside directors are representatives of Pleasanton, Calif.-based Safeway, including Safeway President Steve Burd. However, Burd has said the Safeway board contingent will not be members of that committee.

The committee could recommend that Vons seek a buyout bid from a “white knight,” another supermarket operator. However, that is unlikely because Vons has had a cordial association with Safeway, said Ziegler.

“Why would you go somewhere else when Safeway is a comfortable fit?” he said.

Any new suitor would also have to overcome Safeway’s voting power, said Gary Giblen, an analyst at Smith Barney in New York.

Analysts said that Vons’ high stock price--its shares rose $1.11 to $55.45 on the New York Stock Exchange on Thursday--would make a leveraged buyout to convert Vons into a private company too expensive.

Part of Vons lofty stock price is a reflection of the company’s strong performance. Net income for the first nine months of its fiscal year was $69.6 million, a 48% increase over the same period a year ago.

Vons attributed its performance to strong sales--revenue from stores open at least 12 months rose 5.2%--and better management of expenses.