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Market Basket has several suitors

Arthur T. Demoulas’s bid to buy the Market Basket grocery chain is one of several offers discussed in recent months by supermarket rivals and other investors who have said they would pay between $2.8 billion and $3.3 billion for the company, two people briefed on the matter said.

The company’s board hired the investment bank JP Morgan Chase & Co. to help evaluate the offers, said the two people, who spoke on a condition of anonymity because they were not authorized to speak publicly.

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Although some of the offers were preliminary and made before the recent turmoil at Market Basket, the level of interest in the grocery chain could complicate Arthur T.’s efforts to regain control if rival family members believe his offer undervalues the business.

Arthur T., who was fired as president of the company last month, said Wednesday he had made a bid to buy the 50.5 percent of shares owned by family members who have opposed him. The amount of the offer was not disclosed.

The proposal is expected to be a primary topic of discussion at a company board meeting scheduled for Friday in Boston. If successful, his effort to purchase the chain would put him back in charge and end decades of familial feuding about its ownership and management.

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In recent years, however, efforts to end the stalemate about the company have gone nowhere.

SHIRLEY LEUNG: Demoulas family should put threatened company first

In 2010, Arthur T.’s rivals in the family, led by his cousin, Arthur S. Demoulas, offered to sell most of their shares in the company for more than $1.3 billion, giving Arthur T. and other shareholders the opportunity to buy them, according to legal documents. That effort ended with the sides accusing each other of manipulating the company’s value and dealing in bad faith.

The legal documents also contain details of the private company’s profitability and the huge sums paid to shareholders in recent years. Between 2000 and 2010, the company distributed more than $1 billion to shareholders, with $425 million going to Arthur S. and his sisters. Similar amounts went to Arthur T. and his side of the family.

The huge amounts of money at stake have only fueled the rivalry within the Demoulas clan. The family has been battling for the company since the late 1990s, when Arthur S.’s side of the family prevailed in a lawsuit that accused Arthur T.’s side of stealing their shares in the company. The legal ruling in the case effectively divided ownership of the company between the two warring factions.

The recent turmoil has fueled employee protests that have caused significant disruptions within the chain, preventing some stores from stocking their shelves.

PHOTOS: Market Basket workers protest in support of Arthur T. Demoulas

Experts in family legal disputes said the buyout process is filled with obstacles that could derail any deal, but the sides will be pressed to reach a resolution because of the challenges facing the company.

“They have a couple weeks, maybe, to figure this out and get one side essentially out or put it on the auction block,” said John Davis, faculty chair of the Families in Business program at Harvard University. “But they have to get people back to work.”

The offer by Arthur T. kicks off a multipart process to consider the sale of the company. The offer must first go before the board before being formally presented to Arthur S. and his siblings, who would have to decide whether to sell their shares for the amount offered.

The seven-member board consists of representatives of both sides of the family. For the past year, the majority of directors have sided with Arthur S.

In the 2010 process, when Arthur S.’s side of the family sought to sell their shares, the board of directors, then controlled by Arthur T.’s side of the family, declined to accept the offer and sent the matter to arbitration.

The two sides then became embroiled in a dispute about conditions Arthur S.’s side attached to the prospective sale. The matter ended in a lawsuit, and no shares changed hands.

The latest buyout effort emerged after Arthur S. gained control of the board of directors last year. In the months since, several suitors have emerged for Market Basket, which is reported to have had revenue of $4.6 billion in 2013.

RELATED: Arthur T. Demoulas makes offer to buy chain

The people briefed on the offers said the potential buyers include private equity firms and rival supermarket chains interested in gaining a stronger foothold in New England. Market Basket operates 71 stores in Maine, New Hampshire, and Massachusetts.

It is unclear whether any of the suitors is still interested, given the turmoil that has enveloped the company since Arthur T.’s firing in late June. The recent rallies have featured heated demands from longtime employees that Arthur T. be reinstated as president, which could make acquiring the company a thorny process for any rival chain.

“I couldn’t imagine somebody buying this company at this point,” said Michael Roberto, professor of management at Bryant University. “What are you buying, right? First and foremost, you’re buying the people. You’re buying the service. You’re not going to have the loyalty of these people if you come in as an outsider.”

In offering to buy the company, Arthur T. said he wanted to restore the business model that has made it a regional powerhouse. Though he did not disclose the amount of his offer, Arthur T. asserted that it represented a fair valuation of the shares controlled by Arthur S. and his side of the family.

Casey Ross can be reached at cross@globe.com.
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