INDIANAPOLIS -- It's a new day at Marsh. After flying the family banner for 75 years, the Marshes this week will let go of the grocery chain that has been its legacy.
Sun Capital Partners will close its $325 million acquisition of the regional grocery chain Wednesday. Marsh shareholders gave the deal a nod Friday, according to a report in the Indianapolis Star.
Don E. Marsh, who has led the company for more than 40 years, will step aside for Sun's appointed chief executive, Frank Lazaran, a former president and CEO of [image-nocss] Winn-Dixie Stores.
"We are coming into a new era," said Don Marsh, 68. In this new era, change is certain, said Sun Capital's managing director, T. Scott King. Changes will affect Marsh's 117 grocery and 154 Village Pantry convenience stores. And even though Sun Capital won't elaborate, it also could affect Marsh's employees, the Marsh family and its corporate giving.
Sun Capital, a Florida-based private equity investment firm, is known to sweep into struggling companies, trim top management and turn around performance, according to the newspaper. Sun's past turnarounds include retail cataloger Miles Kimball; Celebrity, a manufacturer of artificial flowers; and Wickes Furniture, a furniture retail store. Its other retail projects include Sam Goody, Suncoast and Mattress Firm.
Sun Capital is expected to stick to the same plan with Marsh but bring more capital resources than Marsh had on its own. Sun has more than $3.5 billion under management.
"You will see a much stronger Marsh a bigger and better Marsh," Matthew Will, associate dean for the University of Indianapolis' School of Business, told the newspaper. Based on Sun's dealings with other holdings, Will predicts it will:
Eliminate top management, allowing middle managers to run much of the operations. Lazaran likely will be joined by two or three other Sun-appointed managers.
Cut costs by closing poor-performing stores or laying off workers.
Improve profits division by division, then sell them off as they improve.
Sell off the company after earning profits for at least two years.
It's unclear what Sun Capital will do to Marsh's stores. But what is clear is that it already has a lot of ideas.
Lazaran, the new CEO, has been secretly shopping Marsh's stores for the past month, the newspaper reports. And Sun Capital has been meeting with Marsh executives to discuss strategy.
Lazaran wants to set up focus groups to gauge shoppers' feelings toward Marsh, then craft strategies in response. "Know your strength, and play to it," he said.
Since February, Marsh had been working to shift its stores' focus from large supermarkets that stock everything to smaller stores that emphasize produce, prepared foods and convenience.
Sun's buyout translates into $11.125 per share a disappointing number for anyone who held Marsh stock before it put itself up for sale last November, according to the newspaper.
Marsh's shares averaged $12 apiece for the year before that and had traded even higher. That suggests many shareholders lost money on this deal.
Several institutional shareholders voiced disappointment with the sale price. But Irene Kasmer, who holds 1,000 Marsh shares, went further. She sued. Last month her attorneys accused Don and Bill Marsh of such mismanagement that "the company is now up for sale at a fire-sale price."
Still, the Marshes will do well. Don and brother Bill will cash in their shares and options for $10.6 million, according to a securities filing. Since Don is being replaced as CEO, he stands to get another $11.6 million in retirement and severance. Other Marsh family members held management jobs a year ago and likely have shares to cash in or severance to collect.
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