Talks to sell the beleaguered Market Basket grocery chain to Arthur T. Demoulas are not about sale price, but a key factor that has emerged is how much the ousted CEO would pay upfront for the family business, according to sources briefed on the negotiations.
The down payment is one of myriad complex deal points still to be hashed out by a self-imposed Friday deadline, but the final figure could affect many other factors, including the schedule on which future payments would be made, the sources said.
Arthur T. Demoulas has characterized his undisclosed offer last week as "pre-crisis," referring to a point about a month ago, before Market Basket employees walked off the job to protest his ouster and sales plunged due to mostly halted product shipments.
Market Basket generated about $4 billion in revenue last year, pegging the value of the 50.5 percent of shares owned by the other side of the Demoulas family — led by Arthur T.'s cousin and rival, board chairman Arthur S. Demoulas — at around $1.5 billion.
Demoulas' backers will likely want to see proof that the chain can generate revenue again before going all in on the deal, sources said. The risk for him is whether he could bring the 71-store chain back to its profitability so he can repay his backers.
While other potential suitors for the grocery chain have been discussed — chief among them the parent company of Hannaford Bros. Co. — Kevin Griffin, publisher of the Griffin Report of Food Marketing, said a deal with Arthur T. is the "only one that makes sense."
"(Market Basket) is a company that's at a virtual standstill," Griffin said. "I can't imagine anybody who has a fiduciary responsibility in making these decisions to make a purchase … could in good faith write a check for a company that's basically nonexistent today."
Independent Market Basket board member Ronald G. Weiner said he couldn't speak on sale negotiations, but offered, "It's in process, and hopefully it will be brought to a conclusion."
Gov. Deval Patrick and New Hampshire Gov. Maggie Hassan convened the parties Sunday to hammer out a deal. State Sen. Eileen Donoghue (D-Lowell) said, "It's gotten very, very quiet as far as what's actually happening. Maybe that's a good sign. Maybe that means they are serious about resolving it. I remain hopeful that cooler heads will prevail, and that something will be salvaged here. If not, I think it could a big problem in these parts for a long time."
Also yesterday, several Market Basket vendors said they have stopped doing business with the company out of allegiance to Arthur T., putting further pressure on Arthur S. to cut a deal.
Yell-O-Glow, a banana processor and grocery distributor in Chelsea, laid off 30 people yesterday after deciding several weeks ago to cut ties after more than 60 years because it "lost all faith in this current regime," board member George J. Markos said.
"We're sort of appalled that this current regime has such utter disregard for the other stakeholders — the public, the customers, the vendors and the employees," Markos said. "And, if the current board was competent, they could recognize the … problem: the current management group can't get it done, and they could fix it in a moment by reinstating the old regime."
Paul Hatziiliades, owner of Watertown specialty food company Extra Virgin Foods, also stopped doing business with Market Basket. "I've temporarily cut ties with people in that building because I fully expect this to be over pretty soon and the proper management team to be back in business," Hatziiliades said.
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