From Tops to Bottom

I wrote up a merger chain for Tops Friendly Market which recently filed chapter 11. This company has 179 stores with about $2.5 billion in sales with 16,000 employees.

What is really interesting about Tops is that this company is the end destination for some huge firms including Penn Traffic and Grand Union.

Grand Union was a high flying store that attempted a massive expansion to 856 stores in the 1980s. They took on so much debt that they collapsed and shed stores and eventually wound up owned by the food distributor.

The other interesting part of the story is the role of big capital. Tops was traded publicly. A firm called "Riordan, Freeman & Spogli " got a hold of the company. From that point on the chain was a football in business warfare. It was sold to a conglomerate called Ahold that bit off the pieces it wanted and spat the carcass back on the market.

Morgan Stanley grabbed a hold of the firm and pasted Penn Station and Grand Union onto the chain before putting the overleveraged firm back on the market.

After Morgan Stanley, the firm simply floundered under the weight of debt.

The way Wall Street does big finance creates these strange rolling bankruptcies; So, Tops declare chapter 11 last month. It appears to be a relatively minor merger involving 179 stores. The merger chain of the store shows that tops is just part of a rolling chain of over-leveraged companies moving in and out of bankruptcy court.

Wall Street does not create financially sustainable companies.