The effort to reach an agreement on a $1.5 billion sale of Market Basket — a complicated transaction under any circumstances — has dragged out amid intense legal maneuvering by members of the Demoulas family who have been fighting each other in court for nearly 25 years.
The negotiations have been handled by at least four law firms, two New York-based investment advisers, three public relations firms, and more than nine warring family shareholders who live in different cities around the United States and abroad.
The financial issues alone — from the timing of payments to tax implications — are extremely complicated. But the negotiations also have gotten tripped up by the question of the degree of authority Arthur T. Demoulas would have to operate the company between an agreement and the completion of a sale — probably a period of several months, people familiar with the talks said.
On Wednesday, talks over the sale again continued into the night, with the company’s board prepared to meet by telephone in the event of a deal.
It is unclear where the two feuding cousins at the center of the standoff, Arthur T. and Arthur S. Demoulas, have been located during the negotiations, or how closely they are following each detail. But the process of simply tracking lawyers’ edits to the agreement, and responding to them, can take a full business day.
With the future of the 71-store chain hanging in the balance, hundreds of pages of documents that spell out the proposed deal were flying back and forth between lawyers in different cities at all hours of the day. With each version, key sticking points were resolved, only to have new issues pop up and block a resolution.
Both sides of the dispute say the biggest issues are settled. But something — whether it’s general mistrust or a specific concern about wording — is preventing them from signing the agreement.
“What’s clear is that both sides demonize the other,” said Robert Mnookin, the chair of the Program on Negotiation at Harvard Law School and author of the book, “Bargaining with the Devil: When to Negotiate, When to Fight.”
“Because of anger and fear, people often have a very hard time thinking through how they might be able to serve their own long-run interests,” Mnookin said. “Their impulse is to fight someone they don’t trust.”
The Market Basket negotiations are focused on an offer by Arthur T. Demoulas and his sisters to pay more than $1.5 billion for the 50.5 percent of the company owned by Arthur S. Demoulas and other relatives on his side of the family.
The Market Basket crisis was triggered in June when a board controlled by Arthur S. fired Arthur T. as president. The action triggered an employee walkout that has disrupted the company’s distribution network and prevented fresh food from making its way to stores. Many customers also have boycotted or simply decided to shop elsewhere because Market Basket no longer has the groceries they need.
In the past, Arthur T. had openly defied members of the company’s board and challenged their authority to oversee his decision to spend tens of millions of dollars of company money on employee bonuses and real estate transactions.
People familiar with the negotiations said the parties have agreed that Arthur T. must come back in the near term to help stabilize the company’s operations, although he would probably still have to consult with the chief executives who were hired to replace him in June.
The financial situation has become so dire the board could act on a plan to close 61 of the company’s 71 stores and lay off most of its remaining employees. Still, the family members have been unable to reach a deal.
‘What’s clear is that both sides demonize the other.’
“They’re on a downward path where there’s no return,” said Tom Kochan, a professor at the Sloane School of Management at the Massachusetts Institute of Technology. “The professionals who are advising them need to take charge and no longer put up with the emotional resistance from one family member or another.”
People familiar with the negotiations said the parties are still working nearly around the clock to reach a deal. Red-lined versions of the stock purchase agreement were being sent between law firms in the wee hours of the morning. Lawyers pored over them, discussed the details with their clients, and sent the documents back.
Arthur T. is represented by the firm of Skadden Arps in Boston. The board of directors is working with Ropes & Gray in Boston, and shareholders on Arthur S.’s side of the family — Arthur S. and his sisters, Diana Merriam and Fotene Demoulas — have retained the firm Jones Day. Over the years, Arthur S. also has worked with the firm Davis, Malm & D’Agostine. Meanwhile, Rafaela Evans, Arthur S.’s sister-in-law, has her own separate legal adviser.
Last Friday, Arthur T. made a final offer that removed a key stumbling block by including about $550 million in financing from an unidentified private equity firm. That money replaced seller financing that would have required Arthur S. and his relatives to lend money to Arthur T.’s side to help complete the deal.
The rest of the money for the purchase would come from a cash payment by Arthur T. and his three sisters — Frances Kettenbach, Glorianne Farnum, and Caren Pasquale — and a mortgage loan secured by the company’s real estate holdings in Massachusetts, New Hampshire, and Maine.
After speaking with the parties Friday, the governors of Massachusetts and New Hampshire predicted that a deal would be reached by Sunday and that workers would back at their jobs early this week.
But an agreement has remained elusive. At several points in the last couple of days, Market Basket’s board has scheduled meetings to take up the sale agreement, but it canceled each of those sessions after learning the parties had not yet reached an accord. Once the shareholders reach agreement, the board would act to put in motion plans to stabilize the company.