Market Basket Seeking Buyer to End Dispute Draws Interest
Market Basket Inc., the New England supermarket chain whose family owners are battling each other for control, has received interest from as many as dozen possible buyers, a representative for the company’s board said.
Among companies that have been approached by the board are Royal Ahold NV (AH) and Belgian grocer Delhaize Group SA (DELB), a person with knowledge of the matter said. The closely held company has a value of about $3.5 billion, the person said, asking not to be identified discussing private information. The company spokesperson declined to name any of the 12 companies.
Finding a buyer would help end a feud over Market Basket between the two sides of the Demoulas family that culminated in the firing of Arthur T. Demoulas as chief executive officer last month. Known as Artie T., he is seeking to acquire the 50.5 percent of Market Basket he doesn’t own from his cousin, Chairman Arthur S. Demoulas.
If Artie T. doesn’t reach an agreement with his cousin, the board could sell the majority stake to another buyer. That buyer would have the option of trying to buyout Artie T. or go into business with him either as a manager or co-owner, or both, one of the people said.
Some are wary of wading into the dispute after Artie T.’s firing prompted Market Basket’s nonunion workers to walk off the job out of loyalty to the CEO, halting deliveries and leaving shelves unstocked.
“This deal has so much hair on it that people who would do it from a business standpoint have to think long and hard about it,” said Ken Harris, managing partner of Chicago-based Cadent Consulting Group, which specializes in advising retail and consumer companies. “If there wasn’t so much vitriol, these other companies would be in the data room giving it a hard look.”
Cerberus Capital Management LP, owners of Albertsons LLC, was among those that was approached and has decided not to proceed, one person said. Market Basket also expects interest from Cincinnati-based Kroger Co. (KR) and private-equity firms, the people said.
Spokesmen for Ahold, Delhaize, and Kroger declined to comment. Ahold owns several grocery chains in the U.S. -- including Stop & Shop, Giant Food, Giant Food Stores, Martin’s Food Markets and Peapod.
The sale effort comes during a period of consolidation in the grocery business with larger players such as Kroger and Cerberus, which is also in the process of acquiring Safeway Inc., buying rivals to build market share and lower costs. Market Basket would give an outside buyer greater market share in New England, where it has 71 stores.
Supermarket News, a trade publication, ranks the company as the 34th largest U.S. grocery retailer with $4.3 billion in annual sales.
Arthur S. has tried to sell his shares in the past and stepped up efforts when the latest family feud disrupted the business, one of the people said. As a result, he and the board hired advisers to seek other bidders, this person said.
Part of the dispute centers around financing for the purchase by Artie T., with the family asking him to pledge the company’s stores and real estate as collateral for funds -- something he has resisted -- two people said.
In a statement on Aug. 10, Artie T. said the financing terms offered by Arthur S. and the board were “onerous” without specifying what terms didn’t meet his approval.
The employee actions have left Market Basket’s store shelves empty. The firing of Artie T. also prompted customer boycotts with shoppers taping receipts from rival grocers to the windows of their hometown Market Basket stores.
Late last month, eight employees say they were fired for spearheading the protests, and the company ordered the 200 employees who have walked off the job to return to work Friday.
“The company has not taken any action in response to their absence, but is left with no choice but to make this last request,” Market Basket said in an Aug. 12 statement. “The company will of course follow all applicable laws should these associates choose to abandon their positions.”
Instead, as of yesterday, the employees continued their protest at the company’s main office in Tewksbury, Massachusetts.
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