Analyst: A&P Worth More in Pieces

Discussion
Nov 06, 2003
George Anderson

By George Anderson

An analyst with Merrill Lynch, Mark Husson, said the Great Atlantic & Pacific Tea Co. would be worth more to its shareholders if it would sell off its various divisions,
reports the Star-Ledger.

“Economies of scale should matter; unfortunately, in the case of A&P, the whole has proven time and again to be worth less than the sum of its parts. Management should do
what makes sense for all shareholders and disassemble this business in an orderly way to maximize the value of the very separate parts.”

Mr. Husson claims A&P’s Canadian division alone should fetch a higher per share price than the total company’s closing stock price from yesterday at $7.87.

A&P recently sold-off its Eight O’Clock Coffee business in a move intended to help the company pay down debt.

Moderator’s Comment: Do Wall Street analysts have undue influence on the operation of retail companies? Is there an advantage in retail to be either
publicly-traded or privately-held?

Mr. Husson has simply written what many have maintained for quite awhile. Still, we’ve wondered in many other instances how managers are able to properly
run their businesses when having to satisfy the expectations of analysts.
[George
Anderson – Moderator
]

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