Matthews, N.C. – Billionaire activist investor Carl Icahn, who recently engaged in a high-profile effort to force EBay to separate its PayPal business, is now demanding that Family Dollar sell itself. Icahn, who recently disclosed he has a 9.4% stake in the discount retailer, sent an open letter to Family Dollar chairman Howard Levine saying that it is imperative the company be put up for sale immediately.
In the letter, Icahn cited reasons including underperforming stock, the likelihood of “significant interest” from entities who would realize “massive synergies” from purchasing Family Dollar, and advantageous stock market and interest rate environment. Inevitable consolidation in the dollar store industry, and what he sees as support from a vast majority of Family Dollar shareholders. Icahn also said he wants three of his representatives added to the Family Dollar board immediately and will take his proposal for a sale directly to shareholders if management doesn’t support it.
“Bringing our proposal for an immediate sale of Family Dollar directly to stockholders will allow them to evaluate the merits of our suggestion and permit them a say in the future of their company, an approach that all responsible fiduciaries should support,” Icahn wrote. “Nevertheless, we view that as a last resort. We welcome an opportunity to engage directly with you and your financial and legal advisors to discuss constructively the merits of our ideas. But time is of the essence. We hope to hear from you shortly.
Family Dollar has already adopted a “poison pill” shareholder’s rights plan in preparation for possible maneuvering by Icahn. In a written response to his letter, the Family Dollar board struck a defiant tone.
“As previously announced the company is undertaking an in-depth business review to identify opportunities to strengthen our value proposition, increase operational efficiencies and improve financial performance,” said Family Dollar. “While this business review is ongoing, we continue to take immediate, strategic actions as appropriate to improve our performance. We are confident that these steps will position Family Dollar to deliver stronger returns for our shareholders.”