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A&P to sell remaining shares of Metro to finance acquisition of Pathmark

11/6/2007

MONTVALE, N.J. A&P has announced that it expects to close on the Pathmark acquisition in December. It also announced that it plans to sell its remaining Metro shares to finance the deal.

A&P revealed in March plans to acquire grocer Pathmark for $1.3 billion in cash, stock and debt. The move—which hardly took the industry by surprise—will create a 550-store, $11 billion supermarket chain that will likely have a greater presence in pharmacy going forward.

Assuming that the 11.7 million shares of Metro are sold prior to Nov. 30, A&P expects to use the proceeds, together with borrowings under a reduced Bridge Facility and a portion of its increased $675 million ABL Facility to finance the deal. Based on the closing price of the shares on Nov. 2, the value totals about $435 million.

“We regard the Metro divestiture as a clear near-term positive for A&P. Since the company had exited the Canadian market, the stake has little real strategic value,” stated Goldman Sachs analyst John Heinbockel in a research note. “So it is essentially being traded for the much more strategically valuable Pathmark asset.”

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