Bad Crow Review: Return Of Pirate Equity
Plus Musk prepares to unloose his fleet of free speech Aryans on disobedient advertisers
Links are at the end.
Yr. editors wrote twice recently about pirate equity firms blunt-objecting their way into the business of providing health care.12 Today we have a different pirate equity tale, from Moe Tkacik writing in Slate.
Tkacik is a frequent writer on capital and its homicidal absurdities,3 and in this piece she turns her attention to an attempt by the pirate equity companies which own the supermarket chain Albertson’s — which in turn owns Safeway, Vons, and other large chains — to further loot the company in the process of selling it to another giant grocery chain, Kroger.4
What caught her eye in the Albertsons case is not that the owners were trying to squeeze $4 billion from Albertson’s ancillary to the sale, but that someone might actually have a shot at stopping them. It’s a long piece and every bit of it worth reading, not least for exposing the resemblance between pirate equity and Tony Soprano.
Earlier this week, four state attorneys general filed two separate lawsuits seeking to stop a clique of private equity firms from swiping $4 billion from the massive supermarket chain they own. It was a frankly shocking turn of events, given that, as anyone who has ever worked for one can attest, looting companies is quite literally what private equity firms do.
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Private equity firms have sucked hundreds of billions of dollars out of American companies since the pandemic began. There may be no less blatant case that these extractions have helped drive America’s broader inflation crisis than Albertsons, the grocery conglomerate whose private equity owners, namely Cerberus and Apollo, announced on Oct. 14 an audacious plan to sell the company to the grocery chain Kroger for $25 billion. That deal would create a 5,000-store, $220 billion colossus that the two companies promised would invest billions of “cost savings from synergies” to “enhance the customer experience” and “[raise] associate wages” and oh, by the way, also in the more immediate term spend “up to $4 billion” on a special dividend to Albertsons shareholders payable Nov. 7, a move the companies explained would commensurately reduce the price Kroger pays for Albertsons to $27.25 a share.If you shop (or used to shop) at an Albertsons-owned supermarket—Safeway, Jewel-Osco, Vons, and Acme are the company’s other biggest brands—you know where that $4 billion is coming from. Albertsons has been far and away the most aggressive markup-wielder of the major grocers. Its 27 percent gross margins tower over Kroger’s 22 percent and Costco’s 13 percent. A San Francisco Chronicle survey of the prices of 15 grocery staples found that Safeway’s were the single-highest of 10 area grocery chains, including Whole Foods; a Retail Watchers user in Irvine, California, compared the prices of an order of groceries from Albertsons they had purchased in 2019 to the same order in 2022 and found that the prices had risen 75 percent in three years. Such gouging helps explain the baffling disparity between the price hikes Americans have been forced to endure on their groceries (up 13.5 percent in August 2022) versus those of restaurant food (up just 8 percent the same month). One industry is heavily concentrated and monopolistic, while the other is fragmented and competitive.
Yr. editors live across the street from a Safeway and shop at it when their will is weak, which sadly is much of the time, and accordingly can attest to the skyrocketing prices. Among the factors driving Albertson’s price gouging, Tkacik says, is the the more than $15 billion in debt and underfunded pension plans, along with rising lease payments for the land the owners sold to themselves where Albertson’s or their subsidiaries owned it.
Tkacik also addresses the difficulty of battling pirate equity firms, whether in court, in Congress, or on the streets.
For years a sad community of union activists and finance geeks has been laboring tirelessly to outlaw its worst abuses. They’ve taken road trips to New York to rally outside the headquarters of KKR and Apollo and gotten arrested outside BlackRock; testified at congressional hearings and galvanized around a robust law, the Stop Wall Street Looting Act, that would actually target the problem at its root in the systemic abuse of the bankruptcy code.
And for years the struggle to essentially “make stealing illegal again” has culminated in just about nothing. Private equity is more powerful than ever; the Stop Wall Street Looting Act will never make it out of committee, and that’s with Democrats in control of both houses of Congress. What I’ve learned in years of interviewing workers in private equity–controlled companies is that, no matter how rock-bottom bad things seem, they can always get worse. (Just take it from residents of the KKR-owned chain of nursing homes where health inspectors repeatedly found no staffers at all during their visits to the facilities after the famous private equity firm immortalized in Barbarians at the Gate added an extra $2 billion in debt to the balance sheet.)
Literally homicidal; not an exaggeration. In one of our other discourses on pirate equity, we learned that mortality in nursing homes owned by companies like KKR is 10% higher than in other nursing homes. If it ever comes to that for you and yours, be sure to check who owns the joint.
If you’re among the people donating to Democrats this year, consider throwing some money to Mary Peltola,5 who will vote to make stealing illegal again and who is attempting to keep Sarah Palin from rearing up on her hind legs and mauling children. Yr. editors did, despite a bank balance of $U.S. 0.
Elsewhere, Elon Musk has decided that since the advertisers who have stopped buying ads on Twitter for the moment didn’t accept his blandishments, perhaps they would react favorably to the threat of boycott6 from millions of Muskites who only want freedom to say the n-word over and over.
Hate speech on the platform ballooned after Musk’s purchase, and banned users immediately began clamoring for reinstatement, undoubtedly making advertisers nervous.
Musk’s complaint about their abandonment led conservative operative Mike Davis to tweet at the new owner: “Name and shame the advertisers who are succumbing to the advertiser boycotts. So we can counter-boycott them.”
The SpaceX and Tesla founder then replied: “Thank you. A thermonuclear name & shame is exactly what will happen if this continues.”
Thermonuclear! He’s bad; he’s nationwide.
One imagines Tesla shareholders, whose shares are worth about half what they were at the beginning of the year, and some of whom are big institutional investors who own shares in the Twitter advertisers at issue, are loving the idea of Musk unleashing hordes of reactionary bigots on those advertisers and their employees who buy Teslas.
And of course other institutional investors and banks have money at stake here as well—not to mention the Saudis, which is not to mention Mohammed bin Bonesaw.
To review: we are ruled by pirates, morons and thieves.
Don’t forget to donate to Mary Peltola. Footnote 5 down there.
French Kicks, “Swimming;” Herbie Hancock, “Maiden Voyage,” with Freddie Hubbard, Tony Williams, Ron Carter, and George Coleman on sax.
And that, comrades, is all we got. Be well, take care.
So far, Musk's threats don't seem to be increasing his advertising revenues.