A&P, Pathmark Agree to Terms of Merger

MONTVALE, N.J. -- A&P here on Monday said it had signed a definitive agreement to acquire Carteret, N.J.-based Pathmark Stores for $1.3 billion in cash, stock and debt, and would position its former rival as a distinct store format. The deal, expected to close in the second half of the year, has been approved by the boards of directors of both companies but requires approval by federal and state antitrust authorities and the stockholders of both companies. Christian Haub, executive chairman of A&P, in a press conference Monday said the deal would “turn two unprofitable companies operating in a highly fragmented market into a more competitive and profitable entity in the future.” He said the company expects to realize $150 million in cost synergies over the next two years. Pathmark, he added, would continue to have its own name, brand and format, which “enhances A&P‘s current offering by attracting and serving a different customer base.” Yucaipa Cos., the largest shareholder of Pathmark, would own approximately 5.3% of the combined company, A&P said, adding that its majority owner, Tengelmann Group, would retain a 44.8% share. -- Jon Springer