Market Basket Sale Completed As 'Artie T.' Gains Total Control

The holiday season has already been successful for Arthur T. Demoulas, members of his family and more than 25,000 associates who work for the Tewksbury, MA privately held regional chain. Earlier this month, the high-volume merchant handed bonuses totaling a reported $49 million to its associates, about a $5 million increase over last year’s figure. Then on December 12, “Artie T.” and members of his family completed the deal to acquire the 50.5 percent stake in the company that was owned by members of the Arthur S. Demoulas family (Arthur T’s first cousin) bringing an end to one of the lengthiest and most bitter family feuds in supermarket history, one that had culminated in a six-week virtual work stoppage this past summer.

The buyout cost Artie T.’s faction $1.6 billion. According to several sources, about $1 billion of that amount will be financed by the Arthur T. Demoulas family (with its vast real estate holdings providing the foundation), with the remainder to be funded by private equity firm the Blackstone Group. However, the Boston Globe reported that the family will finance the entire amount with no private equity interests involved.

In a memo to Market Basket’s associates after the deal was finalized, Arthur T. Demoulas, in part, stated: “…We look forward to making Market Basket stronger and better than ever. We offer our most sincere thank you to our customers, associates, vendors and the communities we serve for their incredible support and their decision to shop Market Basket.”

David McLean, assistant director of operations for the 73-store merchant, added: “Arthur T. Demoulas and the Market Basket team remain fervently dedicated to our customers and our ‘More For Your Dollar’ commitment to them. “We eagerly embark on this new chapter for the company, and expect steady growth in both the near and long term. The world witnessed just how incredible our customers and associates are and the rock solid commitment we have to our ‘people first’ culture.”

Since the agreement between the two feuding factions was announced on August 27, business has come back stronger than ever. Sales have reportedly increased five percent since Labor Day and Market Basket has opened three new Massachusetts stores in the past two months in Littleton, Revere and Waltham. Two other new units in Athol and South Attleboro are slated to open in early 2015.

While there has been much trade conjecture about how the added debt might impact Market Basket’s aggressive pricing strategy, several sources thought the impact would be minimal.

One competing retailer noted, “Whether Wall Street (Blackstone) is involved in this deal or not, Artie T’s family still controls virtually every dynamic of the company. The debt will be a factor, but with the volumes they are producing, which create tremendous cash flow, and the new stores that are in the pipeline. I don’t think they’ll lose the perception with the consumer that there’s overall value in the Market Basket shopping experience. While they are discontinuing their 4 percent discount at the end of this year that program was never promised to continue in 2015. And there may be some further tweaking to deal with their increased debt. However, Arthur T. and his team have created a tremendous internal culture, great relationships with their vendors and a strong link to the communities they serve. Plus, they’re non-union. These guys are way too smart and savvy to damage the reputation they’ve earned.”