News Editorial Board
The best part of the merger between Tops Markets and Price Chopper is that Tops’ future will be tied to another grocery chain rather than a private equity firm.
For more than two decades, Tops has endured various struggles under a series of outside owners. Morgan Stanley Private Equity owned Tops from 2007 to 2013, during which time Tops struggled with more than $700 million in debt.
Reeling from this burden, Tops filed for bankruptcy in 2018, emerging after nine months. A trustee in the bankruptcy case, Alan D. Halperin, filed a lawsuit against Morgan Stanley in February 2020, accusing the company of bleeding Tops dry by loading the company with debt while paying itself $375 million. dollars in “lavish and illegal” dividends.
The lawsuit is pending in US bankruptcy court, but the facts are clear: Tops did not thrive under Morgan Stanley. The merger with Schenectady-based Price Chopper gives the company a chance to regain its footing and start reinvesting in its stores.
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Morgan Stanley, to its credit, brought back Frank Curci as CEO of Tops after buying the company. (Curci had left after an accounting scandal under former owner Royal Ahold in 2003.) Curci’s steady hand was important in keeping the chain afloat during a period of intense competition from Wegmans, Aldi, Walmart, Whole Foods, Target and other retailers. Going forward, Curci will serve on the board of directors of the combined company, but will step down from his executive functions.
Price Chopper/Market 32 should invest in updating Tops stores. Lack of money and bankruptcy prevented Tops from spending as much as it needed to update its stores. Customers can also benefit from the greater buying power of the combined companies.
Wall Street companies that profit from grocers and other retailers have left a trail of wreckage. Chains that closed or filed for bankruptcy while owned by hedge funds or private equity firms include Sears, Toys ‘R’ Us, Gymboree, Payless ShoeSource, RadioShack, The Limited, Sports Authority , Claire’s and Aeropostale.
Between 2015 and 2020, nine supermarket chains backed by private equity firms filed for bankruptcy.
Tops also struggled under its former owner, Dutch company Royal Ahold, which used shared management among its grocery chains, fraying Tops’ roots in western New York.
Price Chopper might just be the best possible partner for Tops. Not only is it in the grocery business – as opposed to the money-raising business – but it has relatively deep pockets and offers little geographic overlap with Tops. Its management seems to understand the importance for Tops of keeping its local identity.
“Keeping them separate and operating on their own goes a long way to ensuring that the local presence, local decision-making and customer experience that both companies are known for remain intact,” said Scott Grimmett, President and CEO of Price. Chopper/Market 32., said Monday.
Curci, who is also chairman of the board of Kaleida Health, will act as a consultant during Tops’ transition period. Curci isn’t quite heading into the sunset, but as his business enters a promising new phase, he can take satisfaction in knowing that a brighter future is on the horizon for Tops.
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