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Politics

Hissing Cousins: Demoulas Family Feud Threatens Food Chain’s Future

BOSTON, MA – Almost 100 years since the Demoulas Family of Lowell, MA opened a tiny grocery specializing in lamb that has blossomed into 71 stores across New England, a bitter battle between cousins of the late former owners for control – or sale – of the operation could bring it to an end.

In 1916, Greek immigrants Athanasios (“Arthur”) and Efrosini Demoulas opened the first store and in 1954 they sold it to two of their six children, Telemachus “Mike” Demoulas and his brother George.

With market savvy and cheap prices, the Brothers Demoulas within 15 years had 15 stores under their family name. Today, it operates as the Market Basket chain but George’s son Arthur S. and Mike’s son Arthur T. have squabbled over the business’ future.

Six years ago, Arthur T. was elected President by the Board of Directors of the Corporation but was summarily fired on June 23 by the board and the next day said he and his family were making an offer to buy company shares they didn’t already control from Arthur S. and his family.

What the company didn’t count on – and which garnered international media attention – was the unrelenting loyalty Arthur T. had from employees happy he had provided strong benefits, including profit sharing and scholarships for employees in college. They also feared a takeover that would threaten their jobs.

Customers responded too, organizing boycotts and joining in a number of rallies at stores where workers refused to accept deliveries from drivers replacing those in the company who refused to work.

That caused a 90 percent drop in business in the first week after Arthur T. was fired and many company stores have empty shelves and few customers, but Arthur S.’ side hasn’t budged.

Protesters said Arthur S. was working with co-CEO’s Felicia Thornton, formerly of the Albertsons supermarkets and James Gooch, formerly of Radio Shack, consultants who replaced Arthur T. in June, to sell off Market Basket. The Boston Globe reported that the parent company of Hannaford Supermarket is also bidding.

Thornton and Gooch issued an ultimatum to workers who refused to work that the would be fired and have let go some in upper-management. But, after getting a letter from the Attorneys General of Massachusetts and New Hampshire advising them of employment laws, haven’t followed through although they set an August 15 return to work deadline.

Most store managers, though, have signed a petition saying they would rather resign than work for anybody but Arthur T. in the event of a sale of the company, and the chain has been taking big losses while the internecine rivalry wages.

The Globe also reported that Arthur T. offered to running the company to get it back on course, as he continued to work to buy Market Basket.” A statement from the company’s board released shortly thereafter voiced continued support for existing management,, but also suggested negotiations for a potential purchase from Demoulas and his family members would continue.

On August 8, members of the board said they had offered a different proposal: to bring back fired and resigned members of Demoulas’s management team in an effort to stabilize the company as negotiations continue, and to work with Demoulas in a non-CEO capacity as part of that process.

Demoulas responded through a spokesperson, calling that offer “disingenuous” and suggesting it amounted to a method to make Market Basket more attractive for another bidder.

On August 9, those rival shareholders—including Arthur S.  – issued a statement saying they were willing to sell to Arthur T. but accusing him of dealing in bad faith.

They also said they had offered Arthur T. a financing plan.

Arthur T. responded on August 10, saying the two sides were not in disagreement about the price of a sale, but suggesting the terms from Arthur S.’s side to complete a deal were “onerous.”

So far, neither side has given in, the shelves remain unstocked, the customers have gone away and what started as a mom-and-pop Greek grocery store might go out of business because cousins were fighting.

 

 

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