Friday, February 4, 2011

The UFCW Union Becomes A Player in the Sprouts-Henry's Acquisition Talks...As the Two Chains Move Closer to A Deal

The Insider - Heard on the Street

A new, outside element - the United Food and Commercial Workers (UFCW) union - has injected itself not directly but significantly into the discussions between representatives of Irvine, California-based Henry's Farmers Market and Phoenix, Arizona-based Sprouts Farmers Market regarding an acquisition of the Henry's food and grocery chain by Sprouts.

And in response, Jim Nielsen, president of Henry's Farmers Market, has sent a letter about the union's actions (via e-mail) to all of Henry's employees, along with having a copy of his letter posted in the break rooms at each of the Henry's Farmers Market banner stores in California and Sun Harvest banner markets in Texas. Henry's Farmers Market is owned by City of Commerce-based Smart & Final, which in-turn is owned by private equity firm Apollo Global Management. Sprouts Farmers Market is privately-held.

Below is the full scoop. But first a little background and recent history.

UFCW union's Henry's wage recover program

In August-September 2010, the UFCW union's Grocery Workers United Wage Recovery Program in Ontario (Southern) California launched a campaign, which it says was in response to requests by several Henry's Farmers Market store-level employees, to recover what the retail grocery workers' union says are back wages owed to some of the chain's employees, due to a variety of reasons.

In August and again in September 2010, the union's wage recovery program sent letters to Henry's workers, asking for information regarding various aspects of their employment at the farmers market-style grocery chain, which is non-union.

Additionally, the UFCW set up a website, "Where is My Money Henry's" (here), where it details the wage claim issues and charges regarding Henry's Farmers Market and some of its past and current employees. You can also see the August and September 2010 letters and related information at the website. The site also has a video in which people identified as employees of Henry's Farmers Market talk about the issue.

Recently the union launched a second website, HenryMarkets.Net, which it's also using in the wage recovery program. It's also set up a twitter feed and a Facebook page as part of the program.

The January 28 letter

On January 28, 2011, the union's wage recovery program sent this letter to employees of Henry's Farmers Market. The letter addresses the current acquisition/merger discussions going on - and yes, the talks are continuing - between representatives of Henry's and Sprouts, the news of which I broke in my January 5, 2011 column -

Along with the letter is this direct mail piece, "We've Been Told...You'll Be Sold," directed to Henry's employees from the UFCW. The headline of the piece: "We've heard (Apollo) Henry's is trying to peddle your store to Sprouts from Phoenix, Arizona. You think Henry's (Apollo) was a Bad Dream...Sprouts will be a Nightmare."

The snail mail piece then asks the Henry's Farmers Market employees to fill-out and mail the attached card back to the union if it wants the UFCW to represent the workers in contract and wage negotiations with Henry's senior management.

Henry's response

Yesterday (Thursday, February 3) Henry's Farmers Market's president, Jim Nielsen, sent a letter to all the employees of the Smart & Final/Apollo-owned grocery chain, updating the workers on the acquisition talks with Sprouts Farmers Market, along with addressing the letter sent them by the UFCW's wage recovery program, which the Henry's employees received in their home mailboxes over the last couple days.

The letter only briefly mentions the acquisition talks, explaining to the Henry's employees that the representatives of Henry's Farmers Market and Sprouts Farmers Market are continuing the discussions, but that there is "no completed transaction" yet.

The rest of Nielsen's letter, over half the text, focuses on the letter sent Henry's employees by the union's wage recovery program. In his letter, Jim Nielson says the UFCW union is trying to drive a wedge between Henry's team members and the chain's management, using the acquisition discussions with Sprouts as a tactic to do so.

Nielsen hasn't said much if anything to Henry's Farmers Market employees or others about the union's wage recovery program since it was launched in August-September 2010 - until now, in his letter yesterday to employees of the food and grocery chain.

And the January 2011 letter and direct mail piece to the Henry's employees from the UFCW union's wage recovery program is the first piece we're aware of that the union has sent to Henry's workers since its September 2010 letter and direct mail package.

The title of my January 30, 2011 column - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal - helps explain the concern by Henry's president Nielsen over the latest efforts by the UFCW union, in which it's using the acquisition talks with Sprouts Farmers Market as its angle in the direct mail appeal to employees of the chain. The key reason for that concern: The ownership of Henry's Farmers Market very much wants a deal with Sprouts.

And I can report that although a deal, or as Henry's president Jim Nielsen writes in his letter to employees, "no completed transaction," has yet been inked by the two parties, the discussions and negotiations progressed this week, and the probability that an acquisition, or some form of hybrid merger, between Sprouts Farmers Market and Henry's Farmers Market is much more likely today than it's been since I first reported on the deal talks in my January 5, 2011 column. Of course, the Devil is always in the details.

Stay tuned.

- 'The Insider'

[Editor's Note: 'The Insider' column appears regularly in Fresh & Easy Buzz. The opinions in the columns are those of 'The Insider,' and not necessarily shared by Fresh & Easy Buzz.]
The Sprouts-Henry's deal talks: Follow the story at the links below

January 5, 2011: 'The Insider' - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

January 7, 2011: 'The Insider' - Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

January 8, 2011: Smart & Final-Henry's Tell Employees About Deal Discussions With Sprouts Farmers Market; Confirming 'The Insider's' Reports

January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

January 11, 2011: 'The Insider' - A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

January 24, 2011: 'The Insider' - End-Game Could Be Near in the Sprouts Farmers Market-Henry's Farmers Market Deal Talks

January 30, 2011: 'The Insider' - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal

December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver

November 17, 2010: Smart & Final Pulls the Plug On All Five SmartCo Foods Stores in Metro Denver After Being Open Less Than Five Months


Anonymous said...

The UFCW only 'Wants' to be a player. They are a business, and are just barking up ANY tree they can,to increase their 'business' (ie;dues) Using scare tactics is one of the lowest forms of people minipulation there is. Too bad they can't back up ANY of the stories. Every Company out there has at least one person that feels that they have been terminated unjustly (which could be true at ANY business) but the Union would be last group that you would ever want to represent you!

Anonymous said...

If the union has no many Henry's employees who say they are owed back wages why are they sending letters to employees asking them to join in the cause? Looks more like they are trolling for potential employees rather than working with those who claim to be owned money by the company to me.

Anonymous said...

The UFCW is a non-profit organization, and a union is an organization of workers who collectively bargain with their employers in order to have a voice in their jobs. Consequently, union membership has been in a decline for the past 30 years, wages have either stagnated or dropped for the average American, while wealth concentrated to the top 1% of Americans. I support the UFCW and if you want to create demand in order to spur the economy you have to decentralize wealth from the bottom up, employees must collectively bargain with their employees in order to get better pay and benefits.

Fresh & Easy Buzz said...


Regarding our use in the headline of "The UFCW Union Becomes A Player..." it refers to the fact Henry's Farmers Market's management felt the UFCW union's outreach to its employees, using the deal talks as the focus, was significant enough to warrant a letter to the workers, focusing on the union's direct mail piece and its comments about the acquisition discussions with Sprouts in it.

- Editor

Anonymous said...

I think the union is worried because all of the fastest-growing grocers in Southern California are non-union. Wal-Mart, Target, Costco, Trader Joe's, Whole Foods, Sprouts, Henry's, Fresh & Easy, 99 Only Only. All non-union. And being union is hurting chains like Stater Bros. and Albertsons especially.