A&P and Pathmark Announce Merger Agreement: A&P to Acquire Pathmark for $1.3 Billion

  
    
  
  
    
      The Great Atlantic & Pacific Tea Company, Inc., Montvale, N.J. (A&P) 
      (NYSE:GAP), and Pathmark Stores, Inc., Carteret, N.J. (Nasdaq: 
      PTMK) today announced that they have reached a definitive merger 
      agreement in which A&P will acquire Pathmark Stores, Inc., for $1.3 
      billion in cash, stock and debt assumption or retirement, creating a 
      550-store, $11 billion supermarket chain operating in the New York, New 
      Jersey and Philadelphia metro areas, as well as in Baltimore/Washington 
      DC, Michigan and Louisiana. 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.
    
    
      Under the terms of the transaction, The Tengelmann Group, currently A&P’s 
      majority shareholder, will remain the largest single shareholder of the 
      combined entity. Christian Haub, Executive Chairman of A&P, will 
      continue as Executive Chairman of the combined company; Eric Claus, 
      President and CEO of A&P, will also maintain the same position in the 
      combined company.
    
    
      Pathmark shareholders will receive $9.00 in cash and 0.12963 shares of 
      A&P stock for each Pathmark share. As a result, Pathmark shareholders, 
      including its largest investor, The Yucaipa Companies LLC, will receive 
      a stake in the combined companies.
    
    
      The boards of both A&P and Pathmark have unanimously approved the 
      transaction. Both Yucaipa Companies and Tengelmann have entered into 
      voting agreements to support the transaction.
    
    
      Following completion of the transaction, 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 combined company will have approximately 49 
      million fully diluted common shares outstanding, compared to 
      approximately 42 million fully diluted common shares today.
    
    
      A&P summarized the key benefits of the transaction as follows:
    
    
      
        Ability to better serve customers in the New York, New Jersey and 
        Philadelphia metro areas.
      
      
        Annual integration synergies of approximately $150 million within two 
        years, through cost reductions in overhead, greater efficiencies, 
        increased utilization of support facilities and the adoption of mutual 
        best practices between the two companies.
      
      
        Retention of the Pathmark banner, format, customer appeal and sales 
        productivity.
      
      
        Combined information systems integration into A&P’s 
        modern technology platform.
      
      
        Corporate management/administrative consolidation of A&P and Pathmark 
        employees in Montvale, New Jersey.
      
      
        Platform for investment in existing and new stores to better compete 
        in the Northeast retail food industry.
      
      
        Benefits to the customer through the breadth of offerings available 
        from the combined companies, and the continuation of community 
        outreach efforts.
      
    
    
      Mr. Haub said, “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 U.S. 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.”
    
    
      Mr. Claus, A&P’s President and CEO, added, “Our 
      team is very excited about the significant potential this combination 
      promises to deliver. By bringing these two great brands together, and by 
      drawing on the strength of Pathmark’s 
      tradition and strong customer franchise in our Northeast region, we have 
      the opportunity to establish an entity that appeals to a very diverse 
      customer base, offering a breadth of products and services. We are eager 
      to build on the operating improvements already achieved at both A&P and 
      Pathmark on a stand-alone basis, by adding Pathmark’s 
      excellent facilities, locations and associates and by taking full 
      advantage of the financial synergies of the transaction. In the future, 
      we will utilize the entire range of Pathmark and A&P formats, by 
      targeting each to specific locations for maximum customer benefit.”
    
    
      John Standley, Pathmark’s CEO, said, “I 
      would like to thank all Pathmark associates for their hard work and 
      dedication. Their exceptional efforts have enabled the company to 
      participate in this transaction, which will create significant value for 
      our shareholders. I am confident the combined Pathmark and A&P teams 
      will join together to create a vibrant new company, which will benefit 
      our customers, associates and shareholders.”
    
    
      In closing, Mr. Haub said, “I want to express 
      my appreciation to the A&P and Pathmark Boards of Directors; to the 
      employees of both companies; to Ron Burkle, Managing Partner of The 
      Yucaipa Companies, LLC; to our advisors, and to those in both 
      organizations whose efforts and cooperation have advanced this landmark 
      transaction toward fruition. I also appreciate the support of The 
      Tengelmann Group, in opting for a substantial but reduced investment in 
      A&P to permit a change that is in the best interest of A&P and all its 
      stakeholders. Moreover, we have every confidence in the long-range value 
      of this investment for all shareholders, as our combined company moves 
      forward.”
    
    
      The transaction is not conditioned on receipt of financing by A&P. Bank 
      of America and Lehman Brothers have committed to provide financing to 
      support the acquisition. A portion of the cash merger consideration will 
      be provided by the sale by A&P of a portion of its shares in Metro, Inc. 
      or, if needed, A&P capital stock, totaling $190 million of net cash 
      proceeds. A&P will assume approximately $170 million of Pathmark capital 
      leases.
    
    
      J.P. Morgan served as financial advisor and Cahill Gordon & Reindel LLP 
      and Axinn, Veltrop & Harkrider LLP served as legal advisors to A&P. 
      Cravath, Swaine & Moore LLP served as legal counsel to Tengelmann.
    
    
      Yucaipa Advisors, LLC served as consultants, Citigroup Global Markets 
      Inc. served as financial advisors and Latham & Watkins LLP served as 
      legal advisors to Pathmark.
    
    
      Investment Community Conference Call 
      and Webcast
    
    
      A&P management will discuss this transaction on a live conference 
      webcast to be held today (March 5) at 10 A.M. Eastern Time. It 
      can be accessed through the A&P website at www.aptea.com.
    
    
      About The Great Atlantic & Pacific Tea 
      Company, Inc.
    
    
      Founded in 1859, A&P is one of the nation’s 
      first supermarket chains. A&P operates 410 stores in nine states and the 
      District of Columbia under the following trade names: A&P, Waldbaum’s, 
      The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, 
      Sav-A-Center and Food Basics. Additional information about A&P may be 
      found at its web site, www.aptea.com.
    
    
      About Pathmark Stores Inc.
    
    
      Pathmark is a regional supermarket chain currently operating 141 
      supermarkets in the New York, New Jersey and Philadelphia metropolitan 
      areas. Additional information about Pathmark may be found at its web 
      site, www.pathmark.com.
    
    
      This release contains forward-looking statements about the future 
      performance of A&P and Pathmark, which are based on management’s 
      assumptions and beliefs in light of the information currently available 
      to it. A&P and Pathmark assume no obligation to update the information 
      contained herein. These forward-looking statements are subject to 
      uncertainties and other factors that could cause actual results to 
      differ materially from such statements including, but not limited to: 
      statements about the anticipated closing of the merger and the expected 
      future business and financial performance of A&P and Pathmark resulting 
      from and following the merger; competitive practices and pricing in the 
      food industry generally and particularly in A&P’s 
      and Pathmark’s principal markets; A&P’s 
      and Pathmark’s relationships with their 
      employees and the terms of future collective bargaining agreements; the 
      costs and other effects of legal and administrative cases and 
      proceedings; the nature and extent of continued consolidation in the 
      food industry; changes in the financial markets which may affect A&P’s 
      and Pathmark’s cost of capital and the 
      ability of A&P and Pathmark to access capital; supply or quality control 
      problems with A&P’s and Pathmark’s 
      vendors; and changes in economic conditions which affect the buying 
      patterns of A&P’s and Pathmark’s 
      customers.
    
    
      Additional Information and Where to 
      Find It
    
    
      In connection with the acquisition of Pathmark by A&P, A&P intends to 
      file with the SEC a registration statement on Form S-4, containing a 
      joint proxy statement/prospectus and other relevant materials. The final 
      joint proxy statement/prospectus will be mailed to the stockholders of 
      A&P and Pathmark. INVESTORS AND SECURITY HOLDERS
    
    
      OF A&P AND PATHMARK ARE URGED TO READ THE JOINT PROXY 
      STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME 
      AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT A&P, 
      PATHMARK AND THE MERGER. The registration statement and joint 
      proxy statement/prospectus and other relevant materials (when they 
      become available), and any other documents filed by A&P and Pathmark 
      with the SEC, may be obtained free of charge at the SEC’s 
      web site at www.sec.gov. In 
      addition, investors and security holders may obtain free copies of the 
      documents (when they are available) filed with the SEC by A&P by 
      directing a request to: The Great Atlantic & Pacific Tea Company, 
      Inc., 2 Paragon Drive, Montvale, NJ 07645, Attn: Investor Relations. Investors 
      and security holders may obtain free copies of the documents filed with 
      the SEC by Pathmark by contacting Pathmark Stores, Inc., 200 Milik 
      Street, Carteret, NJ 07008, Attn. Investor Relations.
    
    
      Pathmark, A&P and their respective executive officers and directors may 
      be deemed to be participating in the solicitation of proxies in 
      connection with the Merger. Information about the executive officers and 
      directors of Pathmark and the number of shares of Pathmark’s 
      common stock beneficially owned by such persons is set forth in the 
      proxy statement for Pathmark’s 2006 Annual 
      Meeting of Stockholders which was filed with the SEC on May 8, 2006. 
      Information about the executive officers and directors of A&P and the 
      number of shares of A&P’s common stock 
      beneficially owned by such persons is set forth in the proxy statement 
      for A&P’s 2006 Annual Meeting of 
      Stockholders which was filed with the SEC on May 25, 2006. Investors may 
      obtain additional information regarding the direct and indirect 
      interests of Pathmark, A&P and their respective executive officers and 
      directors in the Merger by reading the joint proxy statement/prospectus 
      regarding the Merger when it becomes available.
    
    
      This communication shall not constitute an offer to sell or the 
      solicitation of an offer to sell or the solicitation of an offer to buy 
      any securities, nor shall there be any sale of securities in any 
      jurisdiction in which such offer, solicitation or sale would be unlawful 
      prior to registration or qualification under the securities laws of any 
      such jurisdiction.