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Minnesotian
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Well, if they were struggling before the pandemic, how is this going to solve anything? Seems that all this sale will do is to draw out the slow death that was already present before Covid. Maybe this was the time to examine their current business model and do something different.
Look at REI. Built a brand new complex, Covid hit, and they sold it after they saw how well remote working was panning out.
It is just interesting to witness how different businesses are coping with a wrench being thrown into the system.
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timatkn
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Have to agree with Argo it looks like the buyer is investing in MEC, not liquidating. I am not really sure what members expected to happen? They paid their $5 to join the cooperative but it doesn’t entitle them to any say in the sale. Reading some people’s posts seems like they should have been consulted :) If REI ever goes this route I have no illusions anyone is going to ask what I think or want...
T
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Minnesotian
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Unfortunately, it doesn't sound like the acquisition was communicated well to the co-op members.
MEC Acquisition perspective from a founding member
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minnmike
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Usually when companies are bought by investment firms the firms suck all the equity out of the company and the company folds. They are very good at it. Thats what happened to Sear, Kmart, JCPenneys and many others. This is not a life line it's a death rattle.
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Argo
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minnmike: " Usually when companies are bought by investment firms the firms suck all the equity out of the company and the company folds. They are very good at it. Thats what happened to Sear, Kmart, JCPenneys and many others. This is not a life line it's a death rattle."
So what you are saying is that private equity firms inject more equity into troubled firms which often have negative net tangible equity then suck it back out?
Brother, the Canadian outdoor retail community just got thinner with the demise of several Sail stores. We don't have a Bass Pro, Cabellas, nor REI on every street corner. Even our large, general low-end (for camping) hardware store, Canadian Tire, has nothing on the shelves. It means that when the Chinese plague is behind us and retail regains a sense of normalcy, there will be a tremendous opportunity for the survivors or new entrants. But why be a new entrant when you can capitalize on a brand like MEC on the cheap?
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Argo
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It's not optimal but it's certainly relieving. At a time when demand for outdoor products is booming and outdoors retailers could normally be optimistic yet they can't get even their shelves re-supplied because of a pandemic.
MEC gets a lifeline
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Argo
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Minnesotian: "
Unfortunately, it doesn't sound like the acquisition was communicated well to the co-op members.
MEC Acquisition perspective from a founding member "
This is an entirely predictable response in Canada when a Canadian company is taken over by a foreign company. As sure as night follows day. This was more of a rescue as well. They were struggling even before the plague. It's likely the best result from a bad situation.
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AdamXChicago
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Having worked in the private equity space for a decade prior to my retirement, I can tell you these types of situations are split into two investment categories: strip or salvage. I hope for my Canadian friends it’s the latter...
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andym
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REI does have a member elected board of directors but in between elections they probably wouldn't have to consult the membership on a sale. I suppose that could be added to the bylaws, I just scanned them and didn't see anything specified about that. However, in the articles it does say, "On dissolution or final liquidation of the Corporation, the net assets remaining after paying or providing for payment of corporate obligations shall be distributed to the members of the Corporation on the date of dissolution as a final patronage dividend in the ratio of their purchases from the Corporation's cooperative program since January 1, 1965." So the members would have some benefit if the REI corporation went away.
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