MEC, ‘Canada’s most trusted brand,’ announced its sale to a private U.S. company last week. Now, members want to block it.
As a co-op, Mountain Equipment Cooperative (MEC) is member-owned. Last week, MEC’s board of directors announced it agreed to be acquired by a U.S. company, Kingswood Capital Management. But many of MEC’s 5 million-plus members objected, questioning why, as owners, they weren’t notified about a possible sale, nor given an opportunity to vote on the issue.
Now, MEC members are attempting to stop the co-op’s sale to Kingswood, launching a Change.org petition this month to cancel the deal.
“The MEC Board of Directors has approved a deal for the Co-op’s assets to be acquired by a private investor, without the permission of the MEC membership, or any kind of meaningful consultation,” the petition reads. “We are calling on the MEC Board of Directors to cancel the deal, and hold immediate open, fair and democratic board elections.”
Currently, the petition has more than 133,000 signatures, rapidly approaching its 150,000-signature goal.
Why Did MEC Agree to Sell?
In an open letter to MEC members, co-op chairperson of the board, Judi Richardson, cited financial insolvency and the effect of COVID-19, saying MEC was “in dire need of support to continue moving forward.”
“MEC has experienced increasing performance issues since 2016. In July 2019, [the board] brought in new leadership to develop a plan to turn MEC around,” Richardson wrote. “Ultimately, a sale was the only option that would save MEC from bankruptcy or liquidation.”
And while MEC said it agreed to the acquisition in part to “preserve jobs” and “guarantee members continued access” to gear, Richardson also apologized for the brand’s non-transparency with members as the co-op reached the deal.
“First of all, we understand that many are upset and apologize for not communicating more or sooner. As a member-based co-op, we know the importance of transparency, and value co-operative principles,” Richardson wrote. “But in exercising our fiduciary duty, the board’s top priority was preserving jobs and saving MEC from bankruptcy or liquidation. In short, we prioritized MEC’s survival.”
‘Stop the Sale’ Petition
In the wake of the announcement, co-op members, former board members, and other supporters rallied to garner tens of thousands of signatures on the “stop the sale” petition. Many members and organizers criticize the retailer for not disclosing the acquisition to members earlier.
Gripped, a climbing magazine based in Canada, called the sale move “the death of an ideal.”
“To stop the sale of our co-op, a collection of members must call a Special General Meeting of the co-operative. The more members who sign, the stronger our chances,” the petition reads.
History of MEC
A group of Canadian climbers founded MEC Co-op in 1971. By 1974, there were 700 members, who all had equal membership shares. Now, the co-op retailer has over 5 million members. Membership was — and still is — $5.
The co-op business model is similar to that of American retailer REI (Recreation Equipment Incorporated), which is also built on a cooperative model.
A Special Committee of the Board was appointed to examine options to remedy the retailer’s financial standing. The way the retailer filed for acquisition (under a CCAA) doesn’t require member votes. If the sale goes through, the retailer will no longer be a co-op but a privately owned company.
As of the publish date of this article, the sale of MEC is not yet complete.