Pathmark-Yucaipa Deal OKd
Pathmark Stores Inc. said shareholders Thursday approved California billionaire Ron Burkle’s $150-million purchase of a 40% stake in the money-losing supermarket chain.
More than 83% of the 21.9 million shares voted favored the proposal by Burkle’s Yucaipa Cos., Carteret, N.J.-based Pathmark said, adding that the transaction is now completed.
Pathmark will use the funds to reduce debt, renovate stores and open new ones, spokesman Harvey Gutman said. The company, which had $674.6 million in debt in fiscal 2005, has been battered by competition from other grocery chains and warehouse clubs, as well as rising expenses for marketing and employee benefits. It has reported five straight quarterly losses.
“We think that both Yucaipa’s skills and experience in successfully running supermarkets in addition to the investment will be important in improving Pathmark’s operations going forward,” Gutman said.
Shares of Pathmark rose 26 cents to $8.86. The stock has risen 53% this year. Pathmark operates 142 supermarkets, mostly in New York, New Jersey and Pennsylvania.
Yucaipa, based in Los Angeles, has an almost 20-year history of turning around supermarket chains, including Fred Meyer Inc., which it sold to Kroger Co. for $12.6 billion in 1999.