Market Basket close to reaching a deal

August 23, 2014 6:18 AM

And the winners are shoppers, workers, and Team Artie T. Previously. Boston-area grocery shoppers and Market Basket employees rejoice as the Demoulas families have agreed upon a settlement. An "only in Boston" story, Market Basket's history of family feuding has been resolved with the assistance of MA Governor Deval Patrick and NH Governor Maggie Hassan.

On June 23, the Market Basket Board of Directors fired Arthur T. Demoulas (affectionately known as Artie T.) and other long term executives and brought in not one but two new CEOs, former Albertsons CFO Felicia Thornton and former Radio Shack CEO James Gooch.

The next day, workers went on strike and other executives resigned.

Who even owns Market Basket? There are two major shareholders: the people's hero, Artie T. who has 49.5% and his cousin, Arthur S. The Arthur S. camp believes Artie T. wants to run the company into the ground.

According to Boston.com, "It is worth stressing that the events dating back to June 23 are just the most recent chapter in the long tale of the Demoulas family. The history is riddled with lawsuits, fraud, and fisticuffs—yet, still, supermarket success."

The family history is so Shakespherean in its dysfunction that the Boston Globe made a chart to help sort out the warring factions.

Since June 24th, stores have been mostly empty as the two sides engaged in what can be described as public bickering as employees went on strike. On August 18th, Market Basket vendors refused to continue working with the failing company, noting unpaid invoices as well as invoices that had been overpaid by $400,000.

Discount shoppers can rejoice as the deal can be expected to close immediately.

posted by kinetic (33 comments total)

Time for some sawdust confetti! Go Team Artie T!
posted by Spatch at 6:25 AM on August 23, 2014 [1 favorite]

What? Based on all the developments in the Market Basket Saga that have been a staple of my NPR listening during commute, there have been other hopeful moments before that things would get resolved - it's not a done deal yet, and the fury of Arthur S seems to know no bounds.

I hope it does get resolved though - from listening to interviews with workers, I really respect how Arty T. managed his company. I think part of the reason that middle management joined the strike is that many of them were promoted from within, and in some cases did not have the college degrees that generally go with management positions in this day and age. I think management realized that if "businesspeople" took over the company, they would slowly (or quickly) get replaced by people with BAs or MBAs.
posted by permiechickie at 6:28 AM on August 23, 2014

It seems as done a deal as you can get: "Governors Deval Patrick of Massachusetts and Maggie Hassan of New Hampshire said in a joint statement Friday that ”all parties” in the Market Basket battle are “optimistic” a deal will be reached in which Arthur T. Demoulas buys out the company from his cousin Arthur S. Demoulas and other rival shareholders.

The governors say an agreement would also “restore (Arthur T.) to operating authority on an interim basis until the sale closes.”

I can't fathom that Team Artie S would reject this deal since it's got the weight of two governors publicly pushing it, although they hasn't released any press statements.
posted by kinetic at 6:38 AM on August 23, 2014

Thanks for posting this to the blue, kinetic. If the deal truly is good for workers and (working-class) shoppers, it is huge news that their joint efforts saved the day.

FWIW, people complain about the lines at Market Basket but I have never seen a store handle its traffic so smoothly. That's because MB hires enough people and good managers to make that happen.
posted by Sheydem-tants at 6:40 AM on August 23, 2014 [3 favorites]

Who even owns Market Basket? There are two major shareholders: the people's hero, Artie T. who has 49.5% and his cousin, Arthur S. The Arthur S. camp believes Artie T. wants to run the company into the ground.

You accuse your rival of trying to run the company into the ground and you bring in a former CEO of RADIOSHACK?!?
posted by Talez at 7:01 AM on August 23, 2014 [26 favorites]

I hope I'm wrong but knowing how this saga has played out so far, I think proclaiming that a deal has been reached at this point is wildly optimistic. I will hold my rejoicing until paperwork has actually been signed.
posted by FreezBoy at 7:03 AM on August 23, 2014

with more than $500 million of that figure coming in the form of financing from an unnamed private equity firm

Ruh ruoh. The golden rule: thems with the gold makes the rules.
posted by lalochezia at 7:12 AM on August 23, 2014 [4 favorites]

I can't fathom that Team Artie S would reject this deal since it's got the weight of two governors publicly pushing it, although they hasn't released any press statements.

The governors have been working on this, pressuring both sides to come to an agreement for months. I hope this announcement is true, and the gov'rs press release is promising on that front, but I don't think the political involvement is affecting either side of the family's decision much.

(I think the strike is though)
posted by maryr at 7:29 AM on August 23, 2014

Yeah. Radio Shack. As the bear said, you're not here for the hunting, are you?

And yeah x 2 on the mystery vulture. Whatever happens, Artie T will not 'be in charge'.
posted by Devonian at 7:42 AM on August 23, 2014 [2 favorites]

...has been resolved with the assistance of MA Governor Deval Patrick and NH Governor Maggie Hassan.

First, no it hasn't. Not yet. Second, this is a remarkably naive reading. Both governors got involved last weekend. They worked hard to pressure the parties to settle for an announcement Sunday for Monday. They failed. It was embarrassing. It also neatly illustrated why Senator Warren was willing to criticize the Market Basket players from the sidelines but explicitly said she had no plans to get involved—because she's stupid but she ain't stupid. You can't make a public display of pressuring people that you cannot in actuality pressure.

A person has to be drinking some serious Kool-Aid to read a Market Basket sale as a win for either governor. But then this entire situation is like a Kool-Aid buffet. I've only seen one commentator, a supermarket analyst speaking from the safety of Milwaukee, use the word every intelligent onlooker has been thinking: "cult."
posted by cribcage at 8:03 AM on August 23, 2014 [2 favorites]

Yeah, we had a few Market Basket employees of all levels come through the library today - nothing going so far, but there's hope that something will be finalized by Sunday. This is too late for at least one of the employees, as he's had to get a job at Stop and Shop in order to pay his bills. Even things go through, it's unlikely he'dd move back to Market Basket as he wouldn't get as many hours.
posted by robocop is bleeding at 8:06 AM on August 23, 2014

Okay, A DEAL COULD BE CLOSE.

"Governors Deval Patrick of Massachusetts and Maggie Hassan of New Hampshire said in a joint statement Friday that ”all parties” in the Market Basket battle are “optimistic” a deal will be reached in which Arthur T. Demoulas buys out the company from his cousin Arthur S. Demoulas and other rival shareholders."

No, this doesn't mean it's been signed, sealed and delivered. Sorry.
posted by kinetic at 10:58 AM on August 23, 2014

If it does go through, it will be a very refreshing victory for labor. I wonder if the market basket case will catalyze movements from other low wage occupations? The fast food strikes seem to have fizzled out, maybe this is a chance to get them going again. And quick, before the robots get here!
posted by Halogenhat at 11:00 AM on August 23, 2014

Mod note: title modified to better describe a deal in progress, at the request of the poster
posted by mathowie (staff) at 11:02 AM on August 23, 2014

I just think it would have been funnier if their parents had given them similar middle names, perhaps long greek transliterations that had just the last letter different.

"Demoulas" (as the old locals only call it) was cheaper as well as really annoying at times. But it had a few things that were great. Very busy so I found the fish to be pretty fresh.
posted by sammyo at 11:27 AM on August 23, 2014

[title modified to better describe a deal in progress, at the request of the poster]
What do you think this is, Cracked.com?

Disclaimer: I was working on a "Market Basket Deal" post myself but had put it on hold until it was 'fully baked'. I flagged this - I'm moving on.
posted by oneswellfoop at 12:15 PM on August 23, 2014

I think if there had been an agreement it'd be 20pt headlines.
posted by sammyo at 6:11 PM on August 23, 2014

PEACE IN OUR TIME
posted by Elementary Penguin at 4:31 AM on August 24, 2014

I just hope they come to a deal soon, I'm running low on staples.
posted by maryr at 9:20 AM on August 24, 2014 [2 favorites]

Per Boston.com: Sunday Night Market Basket Board Meeting Called Off
posted by AwkwardPause at 9:35 PM on August 24, 2014

From Boston.com: "Prior to the meeting being called off, a source told Boston.com that the board likely would not meet unless the shareholders had agreed to terms of a deal. The two sides of the Demoulas family were still discussing the deal Sunday afternoon, the source said.

By not holding the meeting, the indication may be that shareholders aren’t quite there yet. However, no reason was given for why the board would not be meeting.

There’s no word on when the board will next meet.

On Friday, Arthur T. had called for the deal to be completed by the end of the weekend. The governors of Massachusetts and New Hampshire had also suggested an agreement could be in place by Sunday."

From SaveMarketBasket FB page:

"Tonight's Cancellation

Tonight's Board meeting was obviously one we were all looking forward to as we have such high hopes that resolution is near and that we just might be able to resume our lives again. The fact that it has been cancelled has created much anxiety, fear and anger among so many of us stakeholders and this is perfectly natural.

We're calling for calm and for faith in ATD and his team. The size of this transaction, which we believe to be so close, is enormous and the complexities must be downright mind blowing. We can only assume that the documents must not be ready and the Board has no reason to hold a meeting until they are all in order.

We have become accustomed to disappointment and now that we seem to be so close to our goal, this one certainly stings. Hard as it may be, we need to try and understand that the process is slow...hence the reason for such a late meeting in the first place. Now it has been pushed off and we are hearing that it is still going to take place, hopefully tomorrow."

Neither side explained why the meeting was cancelled or when it would be rescheduled. It would be nice for the MB workers and suppliers to get back to work. Enough's enough, people.
posted by kinetic at 3:17 AM on August 25, 2014

"We're calling for calm and for faith in ATD and his team. ... We can only assume that the documents must not be ready..."

If this situation weren't genuinely hurting a lot of people, it would be hilarious. This is pure cult thinking. These people are Branch Davidians and a lot of them have kids who are paying the price. And of course, both governors deserve another round of applause for their fine, effective work.

Moving on, here's some reading from the other side of the (pardon) aisle.

Arthur S. Demoulas Shows Generosity and Resolve

After a five-month trial, a jury found that Arthur T.'s father had systematically defrauded Arthur S.'s family of hundreds of millions of dollars in stock and real estate holdings over 16 years. ... "The good things that Arthur T. does for his employees and charitable efforts—50 cents of every dollar is coming from Arthur S."

Arthur T. Demoulas's Personal Touch Can Cut Both Ways

In the spring of 1983, 28-year-old Arthur T. Demoulas approached his fellow directors on the board of Demoulas Super Markets and said the family grocery business—now known as Market Basket—should launch a pharmacy division. The board turned him down.

But 14 years later, the Massachusetts Supreme Judicial Court upheld a lower court's ruling that the young heir had invited the rejection by providing "misleading, inaccurate, and materially incomplete" information to the board. That rejection, the high court agreed, allowed him to open his own pharmacy chain, Lee Drug, sell its nine stores to Walgreens in 1990, and keep his cousins, the children of his late Uncle George, from sharing in the business opportunity.

...

The majority stake enjoyed today by Arthur S. and his siblings is the result of a $500 million judgment awarded to George's children as repayment for bad-faith dealings.

Obviously it's understandable how the cult of Artie T came to drink such stiff Kool-Aid. What patron doesn't like a bartender who pours heavy? Nobody takes notice that he's being "generous" with somebody else's booze. The more interesting question is what happens when the bartender becomes owner. Without the ulterior motive of sticking it to his cousins, and with only his own wallet now on the line—if this deal happens—will Artie T still be Robin Hood?

It's difficult to see how this summer's losses won't ensure many of the changes that pawns employees believed they were avoiding. New management would be wise to move Heaven and Earth to postpone any changes for a few months to allow the company to recover its public image, but I wonder how long that can last. The company has taken a real gut punch. A lot of people have been hurt, and it will be interesting to see what a "win" actually yields.
posted by cribcage at 8:43 AM on August 25, 2014 [1 favorite]

If anybody is contemplating yet another FPP for when this deal is actually closed, it's worth noting now the Globe is reporting that in addition to the $550 million from an undisclosed private equity firm, the deal will also involve mortgaging the company's real estate assets in Massachusetts, New Hampshire, and Maine.

Of course, the Globe buries that fact and then quickly moves on without discussing its import—because as we all surely know, "the real winners should be seen as Market Basket’s employees"—but at least they reported it.
posted by cribcage at 1:25 PM on August 27, 2014

ARTIE T. IS BACK.

Boston.com: "Effective immediately, Arthur T. Demoulas is returning to Market Basket with day-to-day operational authority of the company."
posted by kinetic at 2:48 AM on August 28, 2014 [1 favorite]

Fairly credible local rumors suggest that the delay in getting the final signoff on the deal last week were caused by Artie S's marriage on Friday last week.
posted by jenkinsEar at 3:51 AM on August 28, 2014 [1 favorite]

Arthur T's speech (Video is at the bottom.)
posted by usonian at 9:02 AM on August 28, 2014

Fairly credible local rumors suggest that the delay in getting the final signoff on the deal last week were caused by Artie S's marriage on Friday last week.

That seems like a fairly reasonable excuse, actually.
posted by maryr at 9:22 AM on August 28, 2014

#MarketBasket is trending on Twitter in Boston - lots of pictures.

...I'm not sure why there is a giraffe.
posted by maryr at 9:23 AM on August 28, 2014

Although I think it's stupid to be discussing "what have we learned?" on the morning of the announcement, this column by Shirley Leung is an astute analysis of what's occurred so far.

Dan Primack at Fortune is reporting that Arthur T's mystery backer is the Blackstone Group. American Prospect discusses what private equity might mean for the supermarket chain.
posted by cribcage at 11:12 AM on August 28, 2014

Yeah, I'm pretty nervous about the private equity factor; why would a private equity firm front 550 million dollars for this deal if not to engage in their usual slash and burn strategy? They might wait a while and ride the wave of customer and employee goodwill until the chain is back to stability and profitability, but my weary and cynical side is thinking that surely employees and customers still get screwed in the end.
posted by usonian at 11:46 AM on August 28, 2014

Obviously their first challenge is to stock as much and as fast as possible before people receive September benefits checks. I would assume they will get that done before looking at any kind of changes. And I would hope that if they're smart, they will also try to ride the media favoritism through September without any changes and try to restore customer habits. (I wonder how many articles we'll see about other stores being stranded with stock levels that were increased to accommodate the Market Basket loyalists.)

But after the fervor dies later this year and into 2015—obviously assuming this deal doesn't fall through—I'd watch for three indicators: prices; the employees' profit-sharing plan; and the number of stores, both the 71 existing and the additional 5 that are built or under construction. We'll see what happens. Maybe everybody now helming is truly altruistic. But it's worth noting that when left to his own devices, Arthur T sold Lee Drug to Walgreens.
posted by cribcage at 12:16 PM on August 28, 2014

I went to Market Basket today, and the decorated cakes by the checkout aisle were all giraffes with statements like "Stick your neck out!" and "Market Basket Strong!"
posted by mkb at 9:00 PM on August 30, 2014 [1 favorite]

I went to my local Market Basket yesterday to pick up a few things - I didn't look at the cakes, but there were printed 'Welcome Back' posters in the window, the parking lot was completely full and the shelves were almost completely stocked (and among the items that were missing, it was hard to tell if they were still catching up or if they were just sold out because they'd been so damn busy.) It was really something.

As I was in the checkout line I noticed that Queen's We Are The Champions was playing over the store's speaker system.
posted by usonian at 10:29 AM on August 31, 2014 [1 favorite]