A&P Pays $1.3 Billion For Rival Pathmark

The Great Atlantic & Pacific Tea Company, Inc. yesterday said it would buy Pathmark, in a deal valued at $1.3 billion. The acquisition--which has been rumored for months--comes just a week after Whole Foods Markets announced it would merge with Wild Oats.

A&P currently has 410 stores, operating under the banners of A&P, Waldbaum's, A&P Super Foodmart, The Food Emporium, Super Fresh, Farmer Jack, Sav-A-Center and Food Basics. With the Pathmark acquisition, it will now have 550 stores, operating in the New York, New Jersey, and Philadelphia metro areas, as well as in Baltimore, Washington, D.C., Michigan and Louisiana. A&P said it sees annual synergies of $150 million within two years.

Some analysts were skeptical, however. "A&P has been shrinking for years and years," said David J. Livingston, a supermarket consultant in Milwaukee. "Historically, A&P makes an acquisition, then cuts labor, and sales go down. Then because sales are down, they have to go in and cut more expenses--with A&P management, it just becomes a vicious cycle."

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