Members of Canada’s largest retail cooperative have mounted a long-shot bid to block the sale of the popular outdoors supply company to an American private equity group.
Last week, Mountain Equipment Co-op announced it would be acquired by the Los Angeles-based private investment firm Kingswood Capital Management – a move that blindsided many of the co-op’s five million members.
As of Tuesday, the group Save MEC had amassed more than 100,000 signatures on a change.org petition and raised nearly C$75,000 to cover legal costs.
Shock and sorrow as Canada’s best-known co-op sold to US private equity firm
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“This is a business that’s owned by members. And members weren’t even asked or given a chance to come up with alternative ideas,” Save MEC organizer Kevin Harding told the Guardian. “It’s just an affront to cooperative principles and values.”
The surprise sale follows years of increasingly poor performance for the chain of stores – last year, the retailer lost C$11.487m on sales of C$462m. The effects of the pandemic only magnified the crisis within the company.
In public statements, the co-op’s board has framed its decision as making the best of a bad situation, saying executives “had a stark choice: preserve the MEC brand and business under new ownership or enter liquidation ending the MEC legacy.”
The company has said that by entering creditor protection, it does not require approval from its members, since companies can sell assets with court approval.
“In my opinion, this backroom deal by MEC Directors will rob 5.7 million MEC Members out of their beloved co-op and hundreds of millions in assets,” said Niv Froehlich, MEC Member and former MEC adviser.
“Worse, MEC as a co-operative is proudly Canadian and part of the fabric of Canada’s outdoor heritage… If an obscure US company believes they can solve MEC’s liquidity challenges and return MEC to profitability and financial stability fairly quickly, surely the MEC Member-Owners should at least be provided with an opportunity to do the same.”
Save MEC hopes to intervene at the next court appearance on 28 September Harding says the group is “cautiously optimistic” they will be able to present alternative proposals to a judge, including ways in which the company could raise funds from members. The group also wants to hold an emergency members’ meeting to replace MEC’s board of directors.
For Harding, the fight to save the outdoor retailer is tied to the need to preserve its founding cooperative business model.
“A co-op is a living alternative to the way things are: it’s a hint at the way things could and should be,” he said. “It’s a store, but it’s also an element of democracy. It proves that business can be done differently.”
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