By Lisa Kerner
Charlotte, N.C., March 5 - The Great Atlantic & Pacific Tea Co., Inc. (A&P) reached a definitive agreement to acquire Pathmark Stores, Inc. for $1.3 billion in cash, stock and debt assumption or retirement.
Pathmark shareholders will receive $9.00 in cash and 0.12963 shares of A&P stock for each Pathmark share, according to a company news release.
The transaction, which includes a one-year termination fee of $50 million, will result in a 550-store, $11 billion supermarket chain.
The boards of both A&P and Pathmark have unanimously approved the deal, which is expected to close in the second half of 2007.
Under the agreement, A&P's majority shareholder The Tengelmann Group will remain the largest single shareholder of the combined entity. Christian Haub, executive chairman of A&P, will remain as executive chairman of the combined company, and Eric Claus, A&P president and chief executive officer, will maintain the same position in the combined company.
The Yucaipa Cos. LLC, Pathmark's largest investor, will receive a stake in the combined companies.
Following completion of the transaction, 86% of the combined company will be held by existing A&P shareholders and 14% will be held by former Pathmark shareholders, according to the release.
A&P is based in Montvale, N.J., and operates 410 supermarkets in 9 states and the District of Columbia.
Pathmark is a 141-store supermarket chain based in Carteret, N.J.
| Acquirer: | The Great Atlantic & Pacific Tea Co., Inc.
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| Target: | Pathmark Stores, Inc.
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| Transaction value: | $1.3 billion
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| Payment per share: | $9.00 in cash plus 0.12963 shares of A&P stock
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| Termination fee: | $50 million
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| Announcement date: | March 5
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| Expected closing: | Second half of 2007
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| Stock price for acquirer: | NYSE: GAP; $30.86 on March 2
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| Stock price for target: | NYSE: PTMK; $11.25 on March 2
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