By George Anderson
CIBC World Markets analyst Perry Caicco believes A&P may be interested in making a bid for Pathmark Stores.
According to The Associated Press, Mr. Caicco wrote in a note to investors that A&P's payout of a special dividend resulting from the sale of its Canadian operations "paves the way for a share-heavy consolidation move, most likely with Pathmark."
Karen Short, an analyst with Soleil Securities, agreed. She told the Bergen Record newspaper, "The market perception was that [the dividend] was one of the things that had to happen before a deal could be worked. This opens the door."
Speculation over a possible deal between the two New Jersey-based supermarket chains comes after Pathmark posted disappointing results in its latest report.
Pathmark's CEO John Standley said the retailer is making progress in getting turned around. "I am more enthusiastic today than I was six months ago when I got here," he said in a call with analysts.
Mr. Standley said he expects that the company would have a rough go of it in the first two quarters ahead, "but then we'll be on our way."
He added that Pathmark is developing a new store prototype that focuses on perishables. No date was given for a possible rollout.
Yucaipa Cos. owns a 40 percent stake in Pathmark.
Moderator's Comment: What do you see as the challenges and opportunities for the company should a merger between A&P and Pathmark take place? - George Anderson - Moderator