AHOLD-PATHMARK: MUST 50 UNITS GO?

ELLIOT ZWIEBACH

ATLANTA -- Ahold USA here is reportedly negotiating to divest between 40 and 50 stores in the New York-New Jersey area to win approval from the Federal Trade Commission for its acquisition of Pathmark Stores, Carteret, N.J.

In response to vague trade reports -- which quoted unnamed sources close to the FTC saying commission attorneys might recommend that the FTC sue to block the merger -- Pathmark issued a statement last week that said it expects to close the deal on schedule.

The divestitures would reportedly include a mix of units of Edwards Super Food Stores, which Ahold already owns, and Pathmark. There are 68 Edwards locations and 135 Pathmarks.

Most of the stores to be divested would reportedly be Edwards locations, including a handful of store sites, primarily in Long Island, N.Y., observers told SN.

An Ahold representative told SN last week it is premature to speculate on the number of stores the company might have to divest. The FTC declines to comment on mergers under consideration.

Potential buyers could include any of the retailers that operate in the Greater New York area, sources said, including A&P, Montvale, N.J.; Grand Union Co., Wayne, N.J.; ShopRite Supermarkets, a division of Wakefern Food Corp., Elizabeth, N.J.; Foodtown, Woodbridge, N.J.; King Kullen Grocery Co., Westbury, N.Y.; Genuardi's Family Markets, Norristown, Pa.; and Acme Markets, Malvern, Pa., a division of Albertson's, Boise, Idaho.

Ahold USA, a division of Ahold, Zaandam, Netherlands, disclosed in March it would acquire Pathmark for $1.75 billion, with the expectation the deal would be completed before the end of the year.

"This transaction is too important to the communities that Pathmark serves, too important to Pathmark employees and the unions that represent them and too important to Ahold for this deal not to happen," the company said. "We are still in the process of working with the FTC and believe the approval will be received later this year."

Trade observers said the process of winning FTC approval has been slowed by the commission's tougher stance in recent years -- as evidenced by its requirement earlier this year that Albertson's divest 147 stores to win approval for its acquisition of American Stores Co. -- and the fact that Democrats in control of the commission "are in a frenzy" as they face the possibility of being out of office after the next elections.