Workers Win Supermarket President's Job Back

After the intervention of two governors and an enormous public outcry, the chaos that has paralyzed the Market Basket supermarket chain ended Wednesday night with a deal between the two warring factions of the Demoulas family, two people with knowledge of the agreement said.

They said the deal approved by the chain's board essentially meets the sole demand of the workers who have been staging huge public rallies for six weeks: that Arthur T. Demoulas, who until June served as president, be reinstated to lead the company.

His cousin, Arthur S. Demoulas, and his allies agreed to sell their 50.5 percent stake in the company to Arthur T. Demoulas and his allies, who own 49.5 percent, they said.

The price was more than $1.6 billion, which puts the value of the chain at about $3.2 billion, according to one of the people, who was not authorized to speak about terms of the transaction. That valuation may seem high given that the business has ground to a halt, but it reflects optimism that employees can rebuild it.

As part of the deal, Arthur T. Demoulas would return immediately 'with full operating authority,' according to the statement. But he would not technically become chief executive until the deal is finalized over the next several months.

The current co-chief executives, Felicia Thornton and James Gooch, who were installed by Arthur S. Demoulas, would 'remain in a liaison role' until the deal was done, the announcement said.

It was the firing of Arthur T. Demoulas and the installation of Ms. Thornton and Mr. Gooch that touched off protests by employees in mid-July. The deal includes a set of penalties and incentives intended to get Arthur T. Demoulas to finalize the transaction by the end of February.

The settlement would end one of the strangest labor actions in American business history, one that disrupted a low-priced grocery chain that attracted two million shoppers in Massachusetts, New Hampshire and Maine. And perhaps most surprising, it ends with the sole demand of the workers, from top management to the lowliest clerks, being met.

'This show of group solidarity achieved what the employees and customers asked for,' said Christopher Mackin, a lecturer at Rutgers School of Management and Labor Relations. 'This is unheard-of in corporate America. It's like 1776 - we get to pick who governs us.'

The protests left store shelves bare. Shoppers, in solidarity with employees, boycotted the chain. The company started losing millions of dollars a week, and analysts questioned whether it could be salvaged.

Arthur T. Demoulas was elevated to cult status as workers carried posters with his picture, calling him 'our one true leader' and demanding his reinstatement. Over the years he had presented himself as an ally to workers, including by supporting special compensation plans.

As employees and customers held ever bigger and more boisterous rallies, in the boardroom the family factions appeared stuck. As the stalemate continued, Gov. Deval Patrick of Massachusetts and Gov. Maggie Hassan of New Hampshire waded into the fight. Although Market Basket is a private company, they said a successful resolution was overwhelmingly in the public interest.

The buyout process was supervised by the three independent directors - Keith Cowan, Eric Gebaide and Ron Weiner - of Market Basket's seven-member board. Among the biggest issues was what role Arthur T. Demoulas would play after the announcement of a deal and before the actual closing, with a so-called interim operating agreement among the major sticking points.

Thomas A. Kochan, a professor of work and employment research with the Sloan School of Management at M.I.T., said that this episode showed that 'the employees are the most valuable asset in this business.'

It showed, too, that the employee action resonated. 'A lot of people could relate, and they applauded when they saw these employees standing up to save their business and save the business model,' he said.

'Market Basket has done more to educate us on how to manage a business than any business case study that's been written to date,' he said.