News Column

Arthur S. blasts Arthur T.

August 9, 2014

By Jordan Graham, Boston Herald

Aug. 10--In a blistering statement late last night, Market Basket shareholders aligned with majority owner Arthur S. Demoulas said they had repeatedly offered to sell the embattled grocery chain to Arthur T. Demoulas and accused the ousted CEO of acting in bad faith and sabotaging the company, adding that they were left with no choice but to explore other options for a sale.

"Arthur T. Demoulas' conduct to date, including his most recent public statement, continues to undermine Market Basket and the Class B shareholders (led by Arthur T.) have not indicated a willingness to engage in good-faith discussions for a sale," the Class A shareholders said in the statement. "The Class B shareholders have given us no choice at this time but to consider all available options to sell our equity."

It was the latest salvo in an escalating war of words between the rival factions in what experts say is a win-at-all-costs strategy that puts the 71-store chain at risk of suffering irreparable damage.

"It's almost like they have this scorched-earth policy where they'll just let the company fall to pieces," said supermarket analyst David Livingston of DJL Research in Milwaukee. "It's almost like going through a divorce. There became a point where I didn't care how much money I gave my ex-wife, I just wanted to get her out of my life."

Arthur S.'s side of the family controls 50.5 percent of Market Basket, while Arthur T.'s side controls the rest. Market Basket's board of directors has said it is evaluating several offers for the company. The Boston Globe has reported that Hannaford is a potential suitor, but the company has yet to confirm that.

The Class A shareholders, who have been silent until now, said they are still willing to sell to Arthur T. for the price he proposed and have also offered to provide financing.

"Our proposal would permit Arthur T. Demoulas to return to work immediately to work corroboratively to stabilize the business on terms proposed by the independent directors of the Market Basket Board," they said. "Our proposal, made last week and reiterated throughout this week, has not been accepted."

The directors on Friday offered to have Arthur T. return, but not as CEO, prompting his spokeswoman to accuse the board of trying to "stabilize the company, while they consider selling it to another bidder." Yesterday, the three directors issued a statement accusing Arthur T. Demoulas of holding customers and employees hostage.

"Business negotiations should not prevent our associates from earning a living or our customers from buying groceries," the directors said. "It is wrong to hold everyone hostage to gain a negotiation advantage."

Arthur T.'s spokeswoman declined to comment on the latest statement from the board and did not respond to an email on the shareholders' statement.

Livingston said the feuding Demoulas cousins may care more about beating the other than making the right decisions for the company.

"I think they're just trying to one-up each other," Livingston said. "Winning becomes more important than the money and winning becomes more important than customers and employees."

Market Basket store shelves have been empty and customers have gone elsewhere since workers launched protests and walkouts July 18 calling for the return of Arthur T., who was ousted by the board -- led by Arthur S. Demoulas -- in June. Some estimates have put business at the chain down as much as 90 percent.

"The value of the company is going down every day for an outside buyer," said Emily Porschitz, a management professor and expert on family owned businesses at Keene State University in New Hampshire. "Neither side seems to be giving an inch."

The latest statement from the directors did not sit well with employees.

"It's almost like they're calling us pawns," said Scott Ivers, manager of a store in Lowell.

John Savastis, manager of a store in Fitchburg, agreed.

"To make that kind of statement, that employees are being held hostage by Arthur T. Demoulas, it's ludicrous, it's ridiculous, it's disingenuous," Savastis said. "I don't see anyone having power over me, or having power over customers not shopping here."

Porschitz said the battle between cousins is the biggest obstacle to a resolution.

"The feud is so large and deep and long that they really can't have any kind of civil discussion," she said. "They're certainly not sitting down and having any productive communications."


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Source: Boston Herald (MA)

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