A&P Bankruptcy Has Little Impact: Observers

MALVERN, PA—The A&P store location fire sale continues as ACME Markets says it has an agreement to acquire 76 A&P stores in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania under the A&P, Superfresh and Pathmark banners.  Separately, two industry observers say the A&P bankruptcy is unlikely to have much effect on the grocery retail sector.

“This is A&P's second bankruptcy and it has not really be a viable player in the industry for 20-25 years,” David Livingston, president of DJL Research, a supermarket location research firm in Milwaukee, tells GlobeSt.com exclusively. “They've pretty much been forgotten, been considered and ineffectual competitor.”

Livingston says the store turnover is pretty typical and the brand changeover won't cause much disruption.

“Many stores will have new owners while others will go dark,” he says. “Over the past several years new competitors have open basically replacing the redundant and ineffectual A&P stores.  So if A&P just disappears, it should go almost as unnoticed as the stores have gone unnoticed to consumers anyway for the past few decades.”

Acme says its store purchase offer is subject to customary legal and bankruptcy court approvals, following A&P's bankruptcy filing on July 19, 2015.

ACME Markets, a wholly owned subsidiary of AB Acquisition LLC (Albertsons Companies), operates 107 stores across Pennsylvania, Delaware, Maryland and New Jersey. ACME says the transaction would expand its footprint “in a strategic and vibrant market and build upon A&P's rich history of delivering quality products and services in the neighborhoods they serve.”

“The latest A&P Chapter 11 bankruptcy filing is another indicator of the challenges facing the traditional grocery store model,” Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University tells GlobeSt.com exclusively. “Despite a restructuring in 2010, A&P was unable to successfully compete against the triple whammy of the large stores like Walmart,  Costco and others, the higher end stores like Whole Foods, and the continued growth of the online grocery option. A&P stores were typically built in good locations at the time of their construction, but changes in land use, traffic, and other factors may have reduced the quality of the locations. However, these locations may be perfect for other uses. This is another indicator of the changing world of retail that has ripple effects throughout the economy.”

RBC Capital Markets is serving as exclusive financial advisor to ACME. in connection with this transaction. Milbank, Tweed, Hadley & McCloy LLP is serving as lead bankruptcy counsel. Schulte Roth & Zabel LLP is serving as outside legal counsel on antitrust matters. Greenberg Traurig, LLP is serving as outside legal counsel on real estate matters. Citigroup Global Markets Inc. and Bank of America Merrill Lynch provided committed financing in support of the acquisition.