With Market Basket’s future still up in the air, now seems as good a time as any to clarify how a sale of the company would work.
Members of the company’s board of directors would act to facilitate any sale of Market Basket. However, it would be up to the company’s shareholders to actually agree to it.
Here’s how that all works:
There are nine shareholders with the company, all related, breaking down along Arthur lines.
Arthur T. Demoulas, the ousted CEO of the company whose firing last month launched the remarkable protests that have driven Market Basket to its current circumstances, and his three sisters control 49.5 percent of the company. Those sisters are: Frances Kettenbach, who is married to Michael Kettenbach, whose real estate company worked closely with an Arthur T.-led Market Basket; Caren Pasquale, whose husband Joe has also made real estate deals with Market Basket when Arthur T. led the company; and Glorianne Farnham.
Arthur S. Demoulas’s side of the family controls 50.5 percent. That group includes his two sisters, Diana Merriam and Fotene Demoulas, as well as the widow and daughter of his deceased brother, Evan. The widow of his brother is named Rafaele Evans, and the daughter is Vanessa Demoulas.
While Arthur S.’s side has held this majority for a while, shareholders’ decisions are made by vote. Until last year, Evans voted alongside Arthur T., keeping the company in its pre-existing harmony. (It was a tenuous and shaky harmony, to be sure, but the company was growing, customers were shopping, and employees were working.) When Evans sided with Arthur S. last year, the balance of power shifted, culminating in Arthur T.’s dismissal from the corner office in June. This dynamic is explored in a terrific article by Grant Welker of The Lowell Sun published over the weekend.
The 50.5 percent controlled by Arthur S.’s side of the family is the share Arthur T.’s side is trying to buy. Arthur S.’s side gained the slight majority as the result of a legal fight in the 1990s, in which a judge decided Arthur T.’s side had defrauded his cousins’ side out of millions in gaining control of the company. For a vulgar (be warned) and engaging take on that tale, check out The Gloucester Clam.
Those are the shareholders. Then, there’s the board of directors.
The two sides of the family each appoint two members to the board. Shareholders also appoint three independent directors by vote.
The two members appointed by Arthur T.’s side are Terence Carleton and William Shea. The two appointed by Arthur S.’s side are Gerard Levins and Arthur S. himself, the only family member currently on the board.
The three independent directors are Ronald Weiner, Eric Gebaide, and the board’s chairman, Keith Cowan. Cowan had previously been an appointed member on Arthur S.’s side. Arthur T. perceived that as a conflict and challenged it in court, where a judge disagreed. All three independent directors are thought to be aligned with Arthur S.
A committee of board members dedicated to exploring acquisition possibilities would be on the front lines to consider and negotiate a deal with Arthur T. or any other potential buyer, according to a source with knowledge of how private company boards function. Any possible deal would ultimately be presented to the full board, which represents the shareholders. The full board itself cannot take any action unless it is in a formal session. And the board would not do so if a deal does not have shareholder approval. That final point was included in a statement by the board Tuesday.