Arthur T. Demoulas, who was ousted as CEO of Market Basket by a majority vote of board members loyal to his cousin and rival, Arthur S. Demoulas, has won his bid to buy complete control of the company.
Demoulas and his siblings will by the 50.5% of the company they don’t already own from family members who fired him,
Bloomberg reported.
Although financial details weren’t released, the Bloomberg report said Demoulas bid about $1.5 billion.
According to Bloomberg, a company statement said Demoulas will return immediately as head of the company, and all workers who had walked off the job to protest his firing are welcome to return.
The Bloomberg report said some analysts have estimated company losses from the walkout, which began in mid-July, at more than $10 million a day.
The
Boston Globe
reported
that more than $500 million of Demoulas’s $1.5 billion bid will come from private equity financing. The
Globe
article said the private equity money replaces seller financing that would have come from Arthur S. and his side of the family. The remaining funds will come from a cash payment from Arthur T. and his sisters and from a mortgage loan secured by the company’s real estate, the
Globe
report said.
Demoulas had announced his bid to buy the company in late July,
Boston.com reported.
Negotiations dragged on for weeks.
Massachusetts Gov. Deval Patrick and New Hampshire Gov. Maggie Hassan worked to broker the deal. The Boston.com article cited a statement from Market Basket board chairman Keith Cowan saying the governors’ “commitment and engagement made a significant difference.”
The Boston.com report said Demoulas and his team will work in consulting roles until the sale closes, a time frame that is expected to last for months. The co-CEOs who replaced him in June, Felicia Thornton and James Gooch, will remain in place during the closing period.
The Boston.com article noted that Market Basket’s traditional ability to generate higher profits than its competitors despite low prices and generous employee benefits was partially attributable to the company’s lack of debt. “With Arthur T. and family now taking on debt to make the deal work, all eyes will be on whether it is possible for the company to operate as it has and still satisfy the terms of a financing plan,” the article said.
The
Globe
report cited industry observers who said Arthur T. Demoulas is likely to cut dividends and capital expenditures rather than adjust the company’s business model.
An earlier Boston.com report
said Arthur S. Demoulas discussed a sale of his family’s stake in the company with private equity firm Cerberus Capital Management in the spring of 2011. (Sources: Bloomberg, Aug. 28, 2014; Boston.com, Aug. 27, 2014;
Boston Globe
, Aug. 22, 2014; Boston.com, July 25, 2014.)
-
1267 reads