A&P and Pathmark agree to merge

by FoodBusinessNews.net Staff
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MONTVALE, N.J. — A merger agreement between The Great Atlantic & Pacific Tea Company Inc. and Pathmark Stores Inc. will create an $11 billion supermarket chain with 550 stores in New York, New Jersey, Michigan, Louisiana and the Philadelphia and Baltimore/Washington D.C. metro areas.

Under the agreement, A&P will acquire Pathmark Stores for $1.3 billion in cash, stock and debt assumption or retirement, and the transaction is expected to be completed during the second half of A&P’s fiscal year. The completion of the merger is still pending shareholder, regulatory and other customary closing conditions.

"This transaction is the latest step in A&P’s strategic transformation, which began approximately 18 months ago in 2005 with the successful sale of A&P Canada and its U.S. executive leadership change," said Christian Haub, executive chairman of A&P. "We are thrilled to bring together a transaction that will transform A&P’s financial performance, efficiency and overall competitiveness, create substantial value for shareholders of both companies and offer enhanced opportunity for A&P and Pathmark employees."
After the transaction is completed, A&P shareholders will control about 86% of the combined company, and about 14% will be held by former Pathmark shareholders on a fully diluted basis. The Tengelmann Group, which is A&P’s majority shareholder, will continue to be the largest shareholder in the company.

Pathmark’s shareholders will receive $9 and .12963 shares of A&P stock per each Pathmark share.

"By bringing these two great brands together, and by drawing on the strength of Pathmark’s tradition and strong customer franchise in our Northeast region, we have the opportunity to establish an entity that appeals to a very diverse customer base, offering a breadth of products and services," said Eric Claus, president and chief executive officer of A&P.

Both Mr. Claus and Mr. Haub will retain their same positions.



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