Market Basket's new family food fight
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Illustration: Sarah Grillo/Axios
The words "Market Basket" either mean nothing to you or represent your most beloved brand.
- That latter camp is mostly comprised of New Englanders who view the grocery chain as akin to the Red Sox. Or even church. Seriously.
- And its future is now in flux.
Flashback: Some outsiders may remember Market Basket as the subject of a contentious ownership fight in 2014 — between two cousins both named Arthur Demoulas — which included employee protests (often on their own time) and customer boycotts in support of "Artie T."
- The dispute was resolved when Arthus T. Demoulas and his side of the family bought a control stake from Arthur S. Demoulas, in a transaction that included around $1.6 billion in debt financing from top Wall Street firms (which got paid off at the end of last year).
Fast forward: The Demoulas are feuding again, although this time it's siblings instead of cousins.
- Market Basket's board last night put CEO Arthus T. Demoulas and several other employees (including his son and daughter) on paid administrative leave, as it investigates his conduct.
- The board, which includes an unaffiliated private equity exec and PE-focused lawyer, was appointed by the majority shareholder group that includes Arthus T. Demoulas and his three sisters.
Behind the scenes: I'm told that the board had grown frustrated with its lack of access to information, including things like budgets and succession plans.
- "They would learn about new store openings in the paper," a source explains.
- Last August it gave Demoulas an ultimatum about increased transparency, but feels he didn't comply. Instead, the board believes that Demoulas was planning a work stoppage.
- It also appears that the three sisters support the board's decision, perhaps because it seems like he was planning to have his kids eventually take over.
What he's saying: Via a spokesperson, Demoulas issued a statement saying he was "ousted" and that the investigation is a "farcical cover for a hostile takeover."
- His spokesperson didn't respond to repeated requests for further comment.
Look ahead: The immediate question is if employees once again will protest in support of their vaunted CEO, but the longer-term one is what this means for a chain of nearly 100 locations in an era of supermarket consolidation.
- I'm told that the board neither wants to be a seller nor a buyer, believing in organic growth, but ownership fights often result in ownership changes.
