Peas in our time: Artie T. deal is signed

The Globe reports the two sides in the Market Basket stand off have finally and actually signed a deal in which Artie T's side of the Demoulas family will spend more than $1.5 billion buying the shares of the Artie S. side of the family.

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    What a scumbag

    Firing a member of your own family. You only get one of those. When everybody else (expletives) you over, family is all you have left.

    Maybe Arthur S. will die alone. Let's see how much love he can buy with the $1.5 billion.

    Plenty

    I'm sure the S side of the family will find plenty of happiness with their cash. Neither side seemed to care much what the general public thought.

    Everything I've read about this paints BOTH sides of the family as greedy and at times scum sucking. It's great that ATD was good to his people and ran the supermarket well but it seems that was an aside in the whole saga.

    I don't understand the worship of the T side and the denouncement of the S side. They were both just as bad if you read the history. It just so happens that T was lucky for a while and ran the business well. But he lost the court case and it was only a matter of time before he'd lose control.

    The question is what will people do if he's forced or simply desires to raise prices and lower employee wages. Or flips the company to someone else in a few months/years for a big profit.

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    It is traditional capitalism versus

    parasite capitalism. One side built things but had sharp elbows and the sense of ownership that comes from building something. The other was just milking DNA for all it could.

    Money will just flow to different channels. Instead of the S clan performing a tick function, the substantial profit beyond T's sound management stewardship and generous employee compensation is more than adequate to cover the financing.

    Why do I get a sense that the carps are mainly depressed at the vulture capitalism failure?

    Also too, why do I get the sense that a well run stakeholder model is threatening to the parasite capitalists? Is it an unbearable repudiation?

    There is a thing called Costco.. maybe you've heard of it.

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    I know weighing in without facts is your thing.

    By on

    But this is a doozy. Artie T and his father fucked over a widow and her children and screwed them out of hundreds of millions of dollars. These are facts. Artie T and his dad lost two court cases trying to make the same argument you just made. Artie T and his dad employed lawyers who tried to blackmail an innocent court clerk. Two of those lawyers were disbarred for their conduct. Artie T still employs one of those lawyers. That's not sharp elbows. It's borderline criminal conduct.

    You have swallowed the propaganda well. Artie S may be an asshole too. Not much is known about him. But Artie T has been definitively proven to be an asshole and a scumbag. The fact that he sells cheap produce doesn't change that.

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    Seriously

    By on

    Read a bit about Arthur S's career at Demoulas. He worked there most of his life until he was forced out by Arthur T. He was far from a "parasite" or a "tick". Arthur T. wouldn't let him near the business, how exactly was he supposed to contribute?

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    It's not all his, but

    By on

    Yes, of course he'll be ok. That was never an issue. My point was it was silly for people to crucify him for not working for his MB money when it was Arthur T. who booted him from the business when he took control.

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    However the situation got to

    However the situation got to where it was, I think the point is at least in the last few years it's evident Arthur T. had the best interest of his employees and the overall company at heart. I've never seen this kind of loyalty from employees to an executive ever that I can think of, it's not like the employees don't get what is going on here. Contrast with Arthur S.'s attempts to maximize short-term shareholder gain at the company's long term expense and the employees' expense. Nothing is every black and white, no question about that at all. But right now, on this issue, it's pretty clear that Arthur T. was the better party.

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    Well

    By on

    With the hires of CEO Tweedle dee and dumb, and they very vocal decrees coming for S's side that they wanted bigger payouts, a move to pay out their cash reserves and move to debt payment of distributors, and totally screw their employees; I don't think it's any question why Arthur T kept him at arms length.

    It's a case of billionaires who decided they we not making enough billions and decided to they wanted to restructure the company to give themselves bigger payouts, while undercutting what made them successful ILR in the first place.

    Everyone knew what was up, since it's long been how vulture business has been run for a while now. T wanted no part of it, which is why people flocked to him even with his own issues.

    Not running a zero-sum business and proving that the vulture capitalism isn't the only way to offer huge profits, good wages, and low prices is pretty attractive to people now a days. Who would have thought that breeds loyalty and empathy?

    The sad thing is S would have got away with it if he could have kept his ego in check. If they made changes slowly over 20 years, and didn't move to cash in quick, no one would have noticed before it was too late.

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    Then there's this...

    By on

    The tales of Arthur T's going out of his way for his employees are too many to list here. Where are those same stories about Arthur S?

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    How could Athur S

    Arthur S wasn't in a position to go out of his way to help people as he had little power in day to day operations. How could there be any stories of him helping someone when there was no one for him to help?

    That's the criticism -- people reacted to S taking over before he did anything wrong. Sure, if he cut wages, hiked prices, etc then by all means strike. But why pick sides in an ugly family affair simply based on speculation on what someone might or might not do.

    ATD spent lots of company money on a private country club, gave his side of the family questionable high paying jobs, etc. One could argue that if he could have put that money back into MB and the employees would have gotten bigger raises of the prices would have been lower. It seems like the family dispute was more about these "perks" and less about day to day operations. ASD might have been even better but we'll never know.

    CEOs

    By on

    You don't hire the people he hired to be CEOs if treating your employees well and building a strong long term business model are on your to do list.

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    Or

    By on

    Loudly complain about wages being too high, and dividend payouts too small.

    Or complain about company contributions to pensions while you're in the good times.

    Or complain about those large liquid cash reserves you use to keep prices lower, instead of paying it to shareholders and using debt (which directly screws the business model).

    People picked sides because he unwisely showed his hand that pretty clearly was going to screw both customers and workers to put more money into his own pocket. People told him to go fuck himself, and vastly devalued the company under his leadership stewardship

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    Point being

    By on

    either way he's paying someone out. Getting rid of the 50.1 shareholder payments and replacing it with 100% ownership and structured debt payments isn't bad deal if you;re still paying out the same amount of money.

    You're just swapping who the check is written to. Better, the lenders aren't investors and have no say.

    Of course the deal could be terrible. But why would you buy a sinking ship with a terribly financed deal that won't allow you to continue your business plan that's worked so well generating profits and growth?

    T should have done this

    By on

    T should have done this earlier before he grew the chain, this clash was inevitable! it would have been less disruptive.

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    If he does that, the business will fall apart again.

    By on

    The question is what will people do if he's forced or simply desires to raise prices and lower employee wages. Or flips the company to someone else in a few months/years for a big profit.

    They'll do what they've been doing to MarketBasket for the past few months... abandon it in a loud way to watch it wither and die. People were not upset about this because they cared about who got richer, one executive or another; they cared about it because they saw a business plan that treated the workers better than the norm and provided better prices at the same time.

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    You may not know the history

    While Arthur T has the confidence and support of the employees and of the public, the belief on the Arthur S side of the family seems to be that the Arthur T side are scumbags who tried to cheat them out of their inheritance. To get the full story you'd need to go back to the 1990s; given the level of general fog and bullshit and the number of high-priced PR professionals involved, it'll probably be impossible to figure out who was in fact the good guy or the bad guy in that story.

    Cheat them out of their inheritance?

    By on

    THEY ARE ALL RICH BASTARDS ANYWAY! You mean "indolent heirs greedy for more More MORE" were told to shut up and get to work? Aye.

    Glad it's been resolved!

    SO BORED OF THIS STORY I DON'T LIVE IN NEW HAMPSHIRE OR ON THE NORTH SHORE OR IN BROCKTON. EVEN PEOPLE WHO LIVE OUTSIDE THE CITY IN ROSLINDALE DON'T CARE. MAINSTREAM MEDIA STOP TALKING ABOUT IT.

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    Like me

    By on

    I live in the South End too and make (well, made) my way to the Chelsea or Burlington Market Baskets every several weeks. It's well worth the cost of the Zipcar reservation to go for my "big" shopping.

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    It was never about the Demoulas

    It was all about the little guy.

    Most people don't give a rats rear end about the Demoulas Family. This was about the people who worked there, who dedicated their lives to this business and where not going to let somebody pull a Romney and load up the business with debt so they could cash out and leave the employees high and dry.

    It is also about the little guy customer, who gave their money year after year to this business. They also felt like they had a stake in this.

    People are sick and tired of corporate America trying to get more "shareholder value". They bleed these companies dry and stick the employees with the bill.

    No More!

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    So Freakin Happy

    By on

    So Freakin Happy Right now.. almost to tears right now. Nice thing to wake up to this morning after a truly sh*tty day yesterday.

    Like Chris and Fred said above.. this is a big win for the middle class. This is no longer a story about the small, regional supermarket chain, but a story about the middle class trying to keep what is theirs and not be bullied around by some corporation or board of directors trying to suck every last dollar out of a company.

    I hope executives and corporations take notice. We're the middle class, we're mad as hell, and we're not going to take it anymore. This certainly will be remembered and taught in business schools for years to come......

    Don't fuck with a good combination, or your customers and employees will revolt against you and pull a "Market Basket".

    I predict this the rest of the year will be banner year in sales for Market Basket. People will come from miles around to show their support. This has been the story of the year.

    Yay! I get my supermarket back!!!

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    Hello Clue Phone

    By on

    It's for you..

    They already have taken notice.... lots and lots of article about this.

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    I do chuckle

    By on

    about the "will be taught in MBA school" thing. It's right, but it'll only be taught not to put your carriage before the horse. IE a warning not disclose your plan to suck out all the equity from a business and jet.

    Much of what Romney and Bain did was very similar, and would be against the law if they ever actually put down what their plans was. As long as it was done in full recognition the were doing it, but without the paperwork or statements, it was kosher. How else can you load up a company with debt, make "payments" to yourself on that debt and send them absurd bills, then turn around and claim to be the largest creditor in bankruptcy? That's stealing from a bank anywhere else. Here it's good business.

    Heads I win tails you lose only works when you don't document the game is rigged. Otherwise the pitchforks come out before the cash in in the caymans.

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    Weeellll....in the last 3 weeks

    By on

    I've had the pleasure of driving three different CEO's from three different types of businesses from tech to retail and every one of them has asked me for the skinny on MB. You know, from the servile point of view.

    Thanks dvdoff

    By on

    Sure I could have found links.. but honestly its been in Esquire, NYT, and the WSJ. I am sure they are reading the articles and noticing.

    As far as CEOs, like you, my own company's CEO has asked me on a number of occasions whats up with Market Basket. I know our Marketing Exec has also asked because "brand loyalty" is a big deal. (and virtual unheard of at the level Market Basket has for loyalty)

    Annnnd I got asked by the folks over at the equity company that owns my company when they came in for a board meeting. (CEO asked me to speak to them about it since i know so much about it)

    So yes they are looking and noticing. (and probably taking notes).

    Thanks, Adam!

    By on

    For my first laugh of the day. Your headline is wonderful!

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    I feel like...

    By on

    it was probably something he had been saving, hoping it would come to this :)

    Cracked me up too.

    Finally....

    The saga is over, time to get back to business. I couldn't believe how owners could sit there and watch their excellent business slowly dwindle away. It's going to take awhile to recover, and longer still to recover fully. I wish them well and am happy for the employees.

    Just one thing, though. Financing the purchase had 3 pieces:
    - $550 million from a private equity firm
    - a loan
    - cash from ATD and sisters

    The article says that ATD and sisters have full ownership now, so I'm not sure what the $550 million is. Is it debt? Doesn't sound like equity.

    This business that had no debt now has a fair amount of debt. Will this change the business model?

    Well...

    By on

    It will definitely change if they took out a loan to finance the purchase. That's debt right there....and depending on what this $550million is (another loan, or percentage of the business), could be further debt.

    PS- How about that....all the talk about how evil capitalism is, and how greedy "private equity" guys like Mitt Romney are, and it's a private equity firm that helps Arthur T. buy Market Basket.

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    There are a great variety of investment banking and venture

    .. models out there from the Bain loot and scoot version to things that deploy capital in very impressive ways.

    From ABS http://www.absventures.com/

    To Volition http://www.volitioncapital.com/

    Boston venture firms were among the early investors in Apple.

    But one can always maintain simple minded fictions that such things were monolithic, uniform and fully convinced that the vulture model is the only proper way to go..

    Well..

    By on

    Its an equity firm which could just mean a slice of the sales to pay off the debt.

    That's called "interest"

    If it's debt, it's debt, and you have to pay interest on that debt, whether it's a private equity firm or some other lender. I'm not sure what your point is.
    Bottom line: There are now additional expenses to the business that they didn't have before and I wonder how that will change the business.

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    The loan backed by the mortgage is debt too.

    By on

    This was an extremely profitable business before June. I hope they can absorb the debt in the form of reduced dividends to the family owners. Otherwise they may have to raise prices, reduce employee comp. and benefits or some combo of that, along with other coat cutting measures.

    Whether the PE firm took an ownership interest or made a loan, they will be looking for their dividend/loan payment check on the regular. Think of Jimmy Conway. "Fuck you. Pay me."

    This has bed a truly fascinating 20 plus year saga. Thank you to the Demoulas family for all the entertainment!

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    Correct

    By on

    But my point is, it may not hurt their prices depending on the terms.

    Regardless, I'd be willing to pay a little bit more to save this company. And I don't think prices will increase so dramatically it will hurt their bottom line.

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    Lost some expenses too

    By on

    Didn't Artie S's family just take $300 million to disperse to shareholders recently? They'll have the added expense of interest on this loan, but they won't have to bleed money to greedy owners anymore.

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    $300M was distributed to the

    By on

    $300M was distributed to the owners of MB in the form of a dividend....as in pro rata as a % of ownership. ATD's side got 49.5% of it and ASD's side got 50.5%. That's not greedy owners....that's paying out excess cash that's just sitting there so that the stockholders can do something else with it.

    Not just sitting there

    AT was going to give that money to employees as bonuses. The stockholders could do something with it, like buy a another vacation home or a bigger yacht.

    So wrong

    By on

    ATD was NOT going to give employees a $300million bonus.

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    Forget it jake. It's Chinatown.

    By on

    The level that some will go to prop up a multimillionaire CEO is comical.

    Here's an idea - artie t and his dad forced artie s and family out of the company, so they couldn't collect wages/bonuses etc. as employees. The only way they make money is through payments to shareholders. So artie t and his side of the family are free to get paid through wages, side deals etc. but artie s and his side should wait patiently for a magnanimous handout. Got it?

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    Was he going to pay it to

    By on

    Was he going to pay it to employees (~$16k/employee) or was he going to use it to buy more real estate from himself at inflated prices? He could easily have taken his side's $198M of that and hand it over to employees after the distribution was paid. Maybe AT just bought himself a bigger yacht or another vacation home instead.

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    Maybe

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    All depends how its structured.

    Knowing the shareholders were increasingly wanting larger and larger payouts, they very well could be paying less in debt payments than they were issuing in dividend and other payouts and services.

    Large private businesses tend to have some very funny accounting sometimes, and often work as investment banks themselves for their preferred shareholders (ownership stakes). It's not uncommon for family to leverage their accounting departments to invest their own money and pay much larger returns than they would in a traditional bank.

    With more than half of them departing, their accounting might be a lot tighter and they might have more room for other expenses.

    I assume the private equity

    By on

    I assume the private equity firm is just providing financing in the form of debt. I'd think very few PE firms would want an equity stake in a low margin (3-4%) grocery chain where they don't control the board or management. They'll be happy to clip coupons knowing that their debt is likely secured by MB's real estate.

    I have heard of scenarios

    By on

    I have heard of scenarios where the supplier finances for a few cents on a case surcharge. I think I remember how a gas station operator paid his rent to the supplier on a per cents per gallon basis. i am sure there are all sorts of financing schemes available, but the big question is how to deflect the capital gains liability, that must be huge!

    Market Basket: The movie

    By on

    Who would you cast as the dueling cousins?

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    Adam. Please.

    By on

    The whole saga played out within 50 miles of Boston. Of course it's gonna be Wahlburg and Affleck.

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    When they had the big lawsuit

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    When they had the big lawsuit changing the ownership issue years ago, this should have been settled. The T operating cousin should have made an offer to buy out the S pay me the dividends cousin.Then he could have built up the enterprise and solely profited from its growth to present day. Now it is basically financially leveled to the foundation and has to be reinvented to allow for the new debt . Good stuff cheap may be a thing of the past.

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    Listening to Arthur T's

    Listening to Arthur T's speach on NECN video right now. My only question is, who's going play him in the movie? Whose attempt at a Boston accent is going to get mocked next?

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    LOL

    By on

    Yes I loved his thick Mass Accent. You can tell he's a mass native, born and bred. His accent doesn't get any more Mass than that.

    Maaaahket Baaasket!

    I never understood the

    By on

    I never understood the undying love some of the people of Massachusetts have for Market Basket, nor did I understand the voluntary walkouts of un-unionized employees. Such brand loyalty seems so foreign to me, but hey, I'm only a Marxist-leaning liberal who was born in a red state and moved to a blue state thinking I had left the white trash in the rearview mirror.

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    Its surprising

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    to everyone. Really. Remember this boycott and walkout has never been done before at such a level where progress was made.

    It's hard to explain to non locals, because to many its "just a supermarket" but come to a Market Basket in a few weeks and see the differences for yourself. It's the little things (and low prices) that make it stand out and bring customer loyalty. (i.e. Baggers at every register, no self checkouts, low prices, a level of customer service you just don't see in retail anymore)

    But also remember, New England is one of the last areas that still has a 'locally-owned small regional grocer' and hasn't been totally taken out by the Wal*Mart-ification of America. (or Cerebreus or SuperValu or Kroger).

    Market Basket is truly unique and a local institution.

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    '' voluntary walkouts of un

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    '' voluntary walkouts of un-unionized employees '' Union workers wouldnt get away with this. The union would get sued for lost revenue. You might get away with all the workers being sick for a day or two (maybe the water bubbler filter was never serviced ).

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    You've confused me

    By on

    If the "union workers wouldn[']t get away with this," that means they would all be on the street now, right?

    Also, I've never heard of a union going on strike for over a month, then asking for the lost wages back. That's why unions have strike funds. Even in these days of barely taking job actions, big private sector unions (where they exist) build up their strike funds for situations like this.

    I am sure the NLRB would

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    I am sure the NLRB would clout the union with an unfair labor practice. I just know that the rules of engagement changed from when Jimmy Hoffa { Senior } called the ball. Lost wages , working while picketing , trespassing its mind boggling. The cops arrest the guy that crashes the picket line , other way around brother.

    I am sure they wouldn't

    By on

    It seems like someone doesn't like unions. Still, let's keep this in the realm of reality.

    If Market Basket locked their employees out, sure, that's unfair labor, but if the workers walk off their job, that's on the workers.

    It did amaze me that the CEOs didn't fire everybody, but then again, they probably knew what kind of a shitstorm that would have stirred up.

    So, attacking picketers is what you call "crashing the picket line?"

    .??? Don't like unions ?

    By on

    .??? Don't like unions ? There area whole bunch of double standards here. This action was basically about the help anticipating future changes by a change of management. I have worked under contract with companies having changes of management and ownership.You just go to work and do your job,.You honor the existing contract if it is being honored. This situation is so unique it will never be duplicated, but it couldn't have happened in an union contract scenario. You can't walk off a job because you dont like what may happen in the future. Sorry dude , just don't understand you.

    Ok ,Dude , just didn't

    By on

    Ok ,Dude , just didn't understand you. I can't spill all the beans on labor stuff, but basically speculation is dangerous. By speaking it , you arm the opposition forces of your concern. As I said , this situation is unique, this scenario never to be duplicated. But I do acknowledge the necessity of profit in the private sector for an enterprise to succeed. You have to make money for the boss, he gets his before you get yours.As much hatred as there is for the S cousin, you got to respect his 1.5 billion that was in the game. Just as a worker will change banks to get more interest on his savings account , the dude is entitled to get his return . He wanted a different direction. That's how it works. Too bad it was so ugly, for all parties.An orderly transfer of ownership, maybe spread out over time ( minimize capital gains exposure. ) , the terms more friendly , might have served the MB customers , and the Demoulas legacy ,better.

    Is it that hard to understand

    I can get people saying "loyalty" and stuff like that as hard to understand. That stuff is hard to believe a single man was able to touch that many workers.

    But the rest is pretty understandable to me. When a business manages to somehow keep to really low prices while somehow see no trade off in quality, service, or selection. Then throw in the fact the workers are treated well, then you going to have advocates.

    Now, I can see that even reaching "business convention defiance" still seem questionable for such fandom. But let's add this question? If MB disappears (in business model, what the name represents) what alternative exists? Everyone else seem to follow something like mediocrity with medium prices with medium level quality (Shaw and S&S). Low prices trading for terrible quality (Wal Mart style). Or high prices for high quality (Whole Foods). Now factor labor.

    Now factor that (or at least our popular perception) business trained people would view MB as "inefficient". That, regardless it is making profit, it is not "optimized" as they can probably cut benefits, wages, product quality and even raise prices with no overall hit to the bottom line.

    I think that shows how rare Market Basket. I wouldn't be surprise if MB's model was more common we wouldn't have seen this. But it's not, and thus the reaction you saw in the past 5 weeks.

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    By "business trained people"

    By on

    I presume you mean mid-1980s MBA graduates who were indoctrinated in the "The only thing that matters is profits, profits, profits, profits, and - yes - profits" and the "Fire half your work force so your stock value will go up by half a point" way of thinking.

    The sooner we weed these types out of our business system and get more people in who think like Arthur T. has in running MB, the sooner our country will be a lot better off.

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    Let's Hope

    I hope so, from my perspective. I can’t even make heads or tails how true of having other “types” of people in charge. So much information from various groups. Like some groups like to say how much better European and/or Japanese companies treat their workers. Then there are groups who talk about how Americans companies used to treat their workers better back in the 1950’s and 1960’s. But then questions arises how true any of that really is.

    If there is a change coming as you claim. That would means the Millennial Generation would be the group with a different business culture. And my generation a got pretty big bashing in a post not too long ago.

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    MB was a privately held

    By on

    MB was a privately held company. If it were publicly traded, it would have been gobbled up and dismantled and synergized in a heart beat.People have to buy food, and the corporations that sell it want to make money. The MB business model only seemed to be working for only the T percentage ownership, not the S percentage ownership. As the great philosopher George Costanza said " A George, divided against itself, Cannot Stand!"

    Depends by what you mean by

    Depends by what you mean by "working". Part of the problem with arguments involving capitalist systems is people in some kind of thinking of "profit or no profit". It ignores that profit does not always mean having to run that "efficiently".

    Merely saying "People have to buy food, and the corporations that sell it want to make money" implies this binary-ness. They they have to do it to make money or face failure. This ignores that not being "gobbled up and dismantled and synergized" may just mean a smaller profit (and thus the business still works) rather than failure.

    In Market Basket's case, if you define "working" as making a "good profit" then it was working just fine. The likely view of "S" side is they wanted more than just a few million a year, but a big payout at once and/or an even larger stream.

    By working I mean maybe

    By on

    By working I mean maybe acceptable.The S cousin obviously wanted his money to go in a different direction. All the kumbaya around the MB utopia was propped up in part by his money in the game. This action caused his abrupt departure. Maybe he wanted to go slowly, capital gains being a consideration. I am not sure of the binary comparison, but profit keeps the lights on, no profit shuts them of. Now , how you posture the numbers to report profit or efficiently is another thing.
    Here is an example: Using simple numbers, you go to work using 10 gals. of gas a week. You could use Mobil @ $1 .10 per gal , but you use discount gas at $1.00 per gal. Gasoline is like bread , it declines in time, gets wholesaled off like old bananas.Simply put, Mobil costs you $52 .00 more a year by the numbers. But , one cold Feb morning , your gas line freezes up on the way to work, caused by the discount gas. You lose the days pay, get the car towed and repaired, you are out , say , $400 . Now , that $52 savings turns into a $348 loss. Numbers are one dimensional, it's all about your perception.