In a deal that will create a 550-store US$11bn company, the Great Atlantic & Pacific Tea Company has entered into a merger agreement in which A&P will acquire Pathmark for US$1.3bn in cash, stock and debt assumption.
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The transaction is expected to be completed during the second half of A&P’s fiscal 2007 year, subject to completion of shareholder and regulatory approvals, as well as other customary closing conditions.
Commenting on the agreement, A&P said the deal would offer annual integration synergies of approximately $150m within two years.
Pathmark stores will continue to operate under the Pathmark banner.
Under the terms of the deal, A&P’s largest shareholder – The Tengelmann Group – will remain the single largest shareholder of the combined entity. Christian Haub, A&P executive chairman, and Eric Claus, A&P president and CEO, will continue in their current roles.
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By GlobalDataPathmark shareholders will receive $9 in cash and 0.12963 shares of A&P stock for each Pathmark share. Upon completion, approximately 86% of the combined company will be held by existing A&P shareholders and approximately 14% will be held by former Pathmark shareholders on a fully diluted basis.
The boards of both A&P and Pathmark have unanimously approved the deal.
“This is a significant and historic occasion in our industry, and for A&P and Pathmark stakeholders. This transaction is the latest step in A&P’s strategic transformation, which began approximately 18 months ago in 2005 with the successful sale of A&P Canada and its US executive leadership change. We are thrilled to bring together a transaction that will transform A&P’s financial performance, efficiency and overall competitiveness, create substantial value for shareholders of both companies and offer enhanced opportunity for A&P and Pathmark employees,” Haub said.
