Dominick's, the Chicago area grocery chain, long rumored to be for sale by its owner Safeway, could instead be part of a private-equity buyout of the entire Safeway chain, one analyst speculated Thursday in a report to investors.

Sean Egan, managing director at Egan-Jones Ratings Co., said a private-equity firm such as Kohlberg Kravis Roberts & Co., Thomas H. Lee Partners or Chicago's own Madison Dearborn Partners would be the likely buyers of Safeway.

Today's financial market crisis makes buyout money hard to get, but that could change in a few months, Egan told the Sun-Times in an interview.

"Grocery stores generate stable cash flow. They are the quintessential buyout candidates," he said.

"With the federal government pumping liquidity into the market, there will be a time when conditions will be right for a buyout. Safeway is close to the top of the list," Egan said.

Typically, private-equity buyers close poorly performing stores and either resell the property or the lease, he said.

Egan declined to speculate how Dominick's future might be affected by such a scenario.

Six years ago, Safeway initially agreed to sell Dominick's, and then reversed itself.

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