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Mass. grocery chain's employees revolt

Discussion in 'Sports and News' started by wicked, Jul 25, 2014.

  1. wicked

    wicked Well-Known Member

    If you haven't been following this story, it's pretty fascinating.

    A synopsis: The Market Basket chain, which has been roiled by decades of internal disputes with family members, pays its employees well and offers good benefits, but the side of the family that many believe wants to cash out gained control of the board last year. They fired the president from the other half of the family last month, and employees have responded with massive rallies in front of one of their major locations and slowdowns in the supply chain. Monday's rally had an estimated crowd of 10,000, today's could have that or more. There's also been a boycott of the chain, with one estimate I read saying foot traffic is down 90 percent in the past week, and the non-vendor-stocked shelves are barren.

    OK, that was pretty long, but it's an involved deal.

  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    I've been following it. It is a really interesting story. The ousted president really has engendered a lot of loyalty and love over the years from a lot of the workers -- he seems like a great guy on a personal level.

    This is a pretty ugly family feud, though. The two sides of the family have been fighting for a controlling interest for years, and the reason that the other Arthur has controlling interest is that a judge ruled in the 90s that the ousted president's side of the family had been hiding money in order to steal ownership. So the judge gave the other side of the family back a 51 percent stake.

    It has been contentious since. I have no idea what the true story is, but this is something that should have been resolved decades ago with one side buying out the other. When the family behind a family-run business has a falling out like this, it inevitably destroys the business.

    This thing has been a ticking time bomb for decades. With the m&a craze that is in a frenzy right now, this chain had attracted interest, and that was the fuse for all of this. Unfortunately, the board in control probably won't accept the buyout offer from Arthur T. They have hired investment bankers to try to get the best buyout offer possible -- which will make every one of them, including Arthur T., best off financially, but promises the most misery for all involved. They will cash out at what is probably the top of a speculative frenzy, but in the process destroy a family and what sounds like what was a great family-run business.

    What the employees have done is impressive. It sounds like Arthur T. treated a lot of them exceptionally well, and they feel a sense of loyalty.
  3. Smallpotatoes

    Smallpotatoes Well-Known Member

    That was the main grocery store in the town where I grew up. I know a lot of people who worked there. It was the first job for a lot of my classmates. As this started to become news, they have been supportive of the employees and Arthur T.
  4. Baron Scicluna

    Baron Scicluna Well-Known Member

    Bumping this up, the revolt worked. Arthur T. Is buying out his family and was cheered at a rally.

  5. joe

    joe Active Member

    It sounds like there's a great book in there.
  6. Inky_Wretch

    Inky_Wretch Well-Known Member

    Arthur T. gave a pretty good speech too.

  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    It came out today that Arthur T. came up with $500 million of the money he needed from Blackstone Group, which no doubt will get board seats for its investment. Private equity is going to be very profit-minded, so even though Arthur T. no longer has to deal with his cousin's board seats, it will be interesting to see if this turns out to be a deal with a different devil.

    It will really only be an issue if he can't perform. Forbes was reporting that Arthur T. had to secure a really big mortgage to get their investment. That is going to put pressure on him to recoup the lost business the whole mess created and start making money fast. Market Basket is going to have to start throwing off cash to be able to pay back what is now a massive amount of debt that he is suddenly carrying.

    From stuff I have read, Market Basket is a great brand and Blackstone typically makes smart investments. But the chain lost tens of millions over the last six weeks and it has a broken supply chain. If it doesn't fix things quickly, the private equity investors might have it written in that they get some control over operations. There are usually conditions -- the private equity guys want to get in and get out quickly with a profit. If the conditions aren't met, there could be trimming fat, layoffs, etc. All the stuff that labor never had to deal with.

    I am not saying that is going to happen, but Arthur T. really has to perform now. It's not quite the same as borrowing from a loan shark, but private equity can be close.
  8. wicked

    wicked Well-Known Member

    That's a legitimate concern. He's one economic wipeout away from being cooked.

    As a recent convert to their stores, I hope he makes it work.
  9. Songbird

    Songbird Well-Known Member

    JRC Digital First Media knows exactly what you mean.
  10. Paynendearse

    Paynendearse Member

    This could well have been Sam Walton vs. his kids. No way would Walton have approved of what Walmart has become.
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