A family dispute over the value of Lund Food Holdings has gone to trial in Minnesota where a judge could determine the price at which one of its four sibling owners cashes out of the retailer and could potentially order a sale of the business.
The trial dates to a lawsuit filed more than two years ago by Kim Lund, one of four siblings holding a 25% ownership in the Minneapolis-based retailer founded by their grandparents. Her complaint alleges that the company, whose CEO and chairman is her brother Russell “Tres” Lund, is offering a “fire sale” price for her shares — about $21 million, vs. the $80.4 million she says the shares are worth.
Her suit seeks “fair value” of her Lunds ownership interests or, failing that, a court-ordered sale of the company, along with damages, according to the complaint.
Lawyers for Tres Lund, who is named as a defendant in the suit, have argued that buying out the shares at the price suggested by his sister would require that company take on “crippling” debt, local reports said.
The Lund siblings own the company through a series of trusts given to them by their grandfather Russell Lund, who founded the business in 1939. The company today operates 26 Lunds & Byerly’s stores in Minnesota.
Among the charges in Kim Lund’s complaint is that Tres Lund had “eliminated oversight or any effective ability to counter his wishes,” and alleges the CEO had numerous conflicts of interest. It also says the company has rejected numerous third-party offers to acquire it, including an all-cash offer in 2014.
A similar dispute between family supermarket co-owners played out spectacularly in 2014 when cousins Arthur T. and Arthur S. Demoulas clashed over valuations and conflict-of-interest charges for the Market Basket chain in Massachusetts they co-owned. In that case, Arthur S. gained control of the board and fired Arthur T. as CEO, only to see employees supportive of the ousted leader walk off the job in protest. Arthur T. eventually bought out his cousin’s interest with the help of outside investors.