A&P, Pathmark Merger Complete

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A&P, Pathmark Merger Complete

MONTVALE, N.J. -- The Big Apple and its environs inherited a new market share leader as of yesterday, when the Great Atlantic & Pacific Tea Co., Inc. here completed its acquisition of Carteret, N.J.-based Pathmark Stores, Inc. for $1.4 billion in cash, stock, and assumed or retired debt. The deal merges two historic rivals into a new supermarket operator with about 450 stores and $9.4 billion in sales.

Pathmark shareholders got $9 in cash and 0.12963 shares of A&P stock for each Pathmark share. And A&P has gotten a big shot in the arm, judging from comments made by its top executives.

"The merger of these iconic brands will transform A&P's financial performance, efficiency and competitiveness, create substantial value for shareholders, and offer enhanced security and opportunity for associates," said A&P executive chairman Christian Haub in a statement.

A&P now is the market share leader in the New York metropolitan area, the nation's biggest consumer market. The deal also considerably beefed up the company's market share in greater Philadelphia and Baltimore.

A&P said other major features of the acquisition include:
-- A broadened portfolio of desirable real estate and strategic store locations across the regions's most densely populated markets.
-- An enhanced financial profile based on $150 million in integration synergies, which are expected to be achieved within 18 to 24 months.
-- The blending of the two retailers' technology strengths, creating a strong platform to support the combined business.
-- The retention of key Pathmark management personnel to support integration activities and run the combined business going forward.

"The addition of Pathmark fortifies our strength and marketing capability in the Northeast, where we are now focusing all resources and development," said A&P president and c.e.o. Eric Claus. "With its excellent locations, powerful price and value merchandising, and high sales productivity, the Pathmark [high-volume, price-impact] store network complements A&P's Fresh, Discount, and Gourmet formats, rounding out a formidable portfolio of retail offers."

Claus added that sales during the recent Thanksgiving holiday period "bode well for a good holiday selling season for the combined company. Down the road, our diversified portfolio and realization of all back-stage economies will drive sustainable profitability and future breakthrough performance. "

Haub said the next objective is to integrate the two businesses based on a "comprehensive plan developed over the last eight months under the direction of senior management and outside experts."

Founded in 1859, A&P operates 450 stores in six states and the District of Columbia under the A&P, Pathmark, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, and Food Basics banners.