Union sues to block Central Grocers sale

A union representing workers at Central Grocers is seeking a restraining order to prevent the distributor from proceeding with a proposed sale.

The complaint filed by Teamsters Local 703 this week in U.S. District Court in Illinois alleges the co-operative wholesaler has informed the union it has agreed to a deal with an unnamed buyer but has not given workers assurances that a new owner would honor their collective bargaining agreement or address union grievances that a sale could violate successor clauses in the contract.

As reported Wednesday, Central this week said its largest retail customer, Strack & Van Til, was seeking to sell 22 stores and close its remaining nine — an event that would decimate Central’s sales. Central told its member-owners earlier this year it was seeking strategic alternatives but has not commented on plans to sell itself or Strack & Van Til’s assets.

Central, founded in 1917, serves approximately 400 independently owned stores around Chicago, according to its website. It had $1.9 billion in sales for the fiscal year ended in September, of which approximately 38% were retail sales, according to SN’s Top 75.

In its complaint, Local 703 said it became aware Central had entered into a letter of intent to sell its business earlier this month, but that it had not received assurances that the buyer would honor its contract or address ongoing grievances through arbitration as called for in the contract. Central in a letter to the union said it “intends to comply with all legal obligations to the extent this becomes applicable,” but as of this week had not identified a buyer or provided copies of its sales agreement and other information the union had requested, the complaint said.

Local 703 represents approximately 300 workers at Central’s Joliet, Ill., distribution center. Its contract with Central is to expire in March of 2018.

Central and its member-owners have faced challenges over the last year as competition intensified behind heavy investment from chain grocers like Jewel, Mariano’s, Aldi and Walmart and persistent food price deflation. A source this week said Central’s members received no patronage dividends last year.

Sources have speculated that Albertsons, owner of the Jewel chain, would likely be interested in purchasing Strack & Van Til’s stores, although Albertsons has declined comment.

Officials of distributors Supervalu and SpartanNash have both expressed interest in growing by acquisition recently, but it was unclear whether either company had interest in Central. Associated Wholesale Grocers last year completed a merger with Affiliated Foods Midwest providing it with a facility in Kenosha, Wis., from which it said it intended to grow sales in the Upper Midwest. Those companies weren’t immediately available for comment.