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Hannaford parent company a rival bidder for Market Basket

Looks to acquire part or all of chain; complicates quest by ousted Demoulas

A supermarket company has emerged as a serious bidder for the Market Basket chain, complicating Arthur T. Demoulas’s effort to buy out rival family members and take complete control of the grocery empire, according to people briefed on the negotiations.

The Belgium-based parent of Hannaford Bros. Co. is offering to buy part or all of Market Basket, which competes with it in markets throughout New England, said these people, who were not authorized to speak publicly on the matter.

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A spokesman for Hannaford’s parent, Delhaize Group SA, said on Thursday the company would not “comment on rumors or speculation regarding plans to acquire or divest businesses.”

Under the current circumstances, Hannaford would at most be able to buy only a slim majority of the grocery chain — the 50.5 percent that is owned by Arthur S. Demoulas and his siblings — because Arthur T. has not offered to sell the 49.5 percent owned by his side of the family.

Market Basket’s board of directors has only said it is evaluating several offers.

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The competition could make it more difficult for Arthur T. to regain control of the business, especially given his strained relationship with Arthur S. and other relatives who have rebuffed his efforts to reach a sale agreement and repair its operations.

Kevin Griffin, publisher of the Griffin Report on Food Marketing, said Hannaford would stand to gain substantially from a deal to buy Market Basket.

RELATED | Editorial: Market Basket’s only solution is to bring back Arthur T.

“When I think about the geographic locations of Hannaford and Market Basket, there’s some overlap, but I think they would be mostly complementary.”

A grocery chain interested in Market Basket’s majority shares would have two main options, and neither seems appealing, said Gary Chaison, a professor of industrial relations at Clark University.

The buyer could install its own president and push Arthur T. out of the picture but would probably find itself dealing with the same labor unrest plaguing the company now. Or it could hand the reins back to Arthur T.

“The problem there is they would have to have a lot of faith in Arthur T., and you can basically never get rid of him if it doesn’t work out,” Chaison said. “But I think the only way out is a return to the past, with Arthur T. getting his job back.”

RELATED: Patrick does not plan to intervene in Market Basket dispute

Market Basket continues to lose millions of dollars a day because of an employee walkout that has broken its supply chain, preventing fresh food from getting to its shelves. Many employees have said they will not return unless Arthur T. is reinstated as president, and the company has so far failed to break the walkout.

It is unclear whether Arthur T. and the other bidder will lower their offers in coming weeks because of the losses suffered by the company. One person familiar with the negotiations said that, in addition to Arthur T. and the rival supermarket company, 10 other parties have expressed interest in buying Market Basket.

“This thing gets weirder and weirder by the day,” Griffin said. “I’m having a hard time getting my head around how another company would come to a valuation when it’s such a moving target. I can’t wait to see the movie when all this is done.”

Market Basket protesters made their feelings known as potential employees attended a job fair in Andover Wednesday.

Jim Davis/Globe Staff

Market Basket protesters made their feelings known as potential employees attended a job fair in Andover Wednesday.

Griffin said it was hard to imagine an outside buyer beating Arthur T.’s offer, but that emotions could get in the way of a rational financial decision. “It just seems like [Arthur S.] wants to sell to anyone but Arthur T.,” Griffin said.

At the start of the crisis, industry analysts estimated Market Basket’s value at between $3 billion and $3.5 billion.

So far, Arthur T. has not cut the amount of his initial bid, said one person who was not authorized to speak publicly on the matter.

On Sunday, Arthur T. offered to return to the company immediately to help restore its operations while the parties continued to negotiate.

But the board of directors reaffirmed its support for co-chief executives Felicia Thornton and James Gooch, hired to replace Arthur T. in late June. They have faced stiff resistance from employees, who have refused to work for them and frustrated efforts to find replacements.

Hundreds of employees protested outside a job fair on Wednesday in Andover, where the company sought to attract applicants for store director, buyer, and other key positions.

James J. Hanks, who specializes in mergers and acquisitions and corporate governance at Northwestern Law School, said an outside buyer might be able to strike a middle ground with Arthur T.

RELATED: Part-time Market Basket workers have hours cut

That buyer could appoint him to an advisory board, keeping him involved in setting the company’s overall direction while hiring a new chief executive to oversee daily operations.

But most buyers are not so magnanimous, he noted. Hanks said it was more likely that incoming management would attempt to buy out the remaining shares controlled by Arthur T. While the former president has said his portion of Market Basket is not on the block, things could get uncomfortable for him.

“The buyer could go to Arthur T. and play hardball and say, ‘We have the votes to merge Market Basket with our chain that we own 100 percent,’ ” Hanks said, thus diluting Arthur T.’s ownership.

The negotiations over a possible sale of the company have remained deadlocked for several days. And even as Arthur T. and the rival suitor emerged as the strongest bidders Wednesday, there was no sign a deal was imminent.

Arthur T. has never shown any interest in selling his shares of the company, where he has worked for most of his life.

In 2008, he was named president of the chain, which has been riven by conflicts over real estate transactions, management of the employee profit-sharing plan, and how much money to distribute to shareholders.

The discord dates back to the early 1990s, when a jury found that Arthur T.’s father, Telemachus “Mike” Demoulas, defrauded Arthur S. and other relatives out of their shares in the company.

Arthur T. was able to win election as president because one member of Arthur S.’s side of the family, Rafaela Evans, voted with him in board elections. But Evans switched her vote last year, giving Arthur S. control and allowing him to push for his cousin’s firing.

Casey Ross can be reached at cross@globe.com. Callum Borchers can be reached at callum.borchers@globe.com.
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