A& P Parent Agrees to Buy Pathmark Grocery Chain
Bloomberg News
Tuesday, March 6, 2007; Page D03
Great Atlantic & Pacific Tea Co., the owner of A&P, Super Fresh and Food Emporium supermarkets, agreed to buy Pathmark Stores for $1.3 billion to create the largest grocery chain in the Northeast.
Pathmark investors are to receive about $13 a share -- $9 in cash and 0.13 share of Great Atlantic stock, the companies said yesterday in a statement. Great Atlantic, of Montvale, N.J., is paying 7.9 percent more than Pathmark's stock price Feb. 26, the day before the companies said they were discussing a merger. The price includes debt and liabilities.
The new chain will have 550 stores, mostly in New York, New Jersey and Philadelphia, and annual sales of $11 billion. The companies said the merger would reduce costs and help fend off competition from Wal-Mart and Costco as they increase grocery sales in the region.
"This is A&P trying to keep themselves alive," said Gary Giblen, an analyst with Brean Murray Carret in New York.
The companies plan to consolidate headquarters in Montvale and cut overlapping jobs. The companies did not say how many positions would be eliminated. Great Atlantic operates one Super Fresh in the District and about 30 in Maryland.
In trading yesterday, Great Atlantic closed at $32.50, up $1.64, or 5.3 percent. Pathmark closed at $12.46, up $1.21, or 10.8 percent.
Great Atlantic chief executive Eric Claus is to head the combined company, and Christian Haub, chairman of Great Atlantic, is to retain that title. Pathmark stores are to keep operating under that name.
