A&P to acquire Pathmark Stores in merger

The Great Atlantic & Pacific Tea Co Inc and Pathmark Stores Inc have reached a definitive merger agreement in which A&P will acquire Carteret NJ-based Pathmark for $1.3 billion in cash, stock, and debt assumption or retirement. This creates a 550-store, $11 billion supermarket chain operating in the New York, New Jersey, and Philadelphia metro areas, as well as in Baltimore/Washington DC, Michigan, and Louisiana. The transaction should be completed during the second half of A&P's fiscal 2007 year.

Under terms of the transaction, The Tengelmann Group, currently A&P's majority shareholder, will remain the largest single shareholder of the combined entity. Christian Haub, executive chairman of A&P, will continue as executive chairman of the combined company. Eric Claus, president and chief executive officer of Montvale NJ-based A&P, will maintain this position in the combined company.

Pathmark shareholders will receive $9 in cash and 0.12963 shares of A&P stock for each Pathmark share. As a result, Pathmark shareholders, including the firm's largest investor, The Yucaipa Companies LLC, will receive a stake in the combined companies.

The boards of both A&P and Pathmark have unanimously approved the transaction. Both Yucaipa and Tengelmann have entered into voting agreements to support the transaction.

After completion of the transaction, about 86% of the combined company will be held by existing A&P shareholders and about 14% by former Pathmark shareholders.