Family Dollar adopts plan to keep Carl Icahn at bay

New York Times photo of the
Springfield Family Dollar

Family Dollar Stores has battened down the hatches days after the activist investor Carl C. Icahn declared the discount chain his latest target.

http://dealbook.nytimes.com/2014/06/09/family-dollar-adopts-plan-to-keep-carl-icahn-at-bay/

Family Dollar Adopts Plan to Keep Carl Icahn at Bay By ALEXANDRA STEVENSON JUNE 9, 2014 10:40 AM A Family Dollar store in Springfield, Vt. Ilana Panich-Linsman for The New York Times A Family Dollar store in Springfield, Vt. Family Dollar Stores has battened down the hatches days after the activist investor Carl C. Icahn declared the discount chain his latest target. Mr. Icahn disclosed a 9.39 percent stake in the company on Friday in a filing with the Securities and Exchange Commission. Mr. Icahn has a long history of buying large stakes in companies to exert pressure on the board. News of Mr. Icahn’s stake and the company’s response sent its share price climbing by more than 15 percent on Monday morning. Family Dollar Stores announced on Monday morning that it had adopted a one-year shareholder rights plan, also known as a poison pill. Companies increasingly under attack by activist investors are using poison pills to try to thwart activists from making demands on the management to change the business. The move by Family Dollar Stores prevents any shareholder from amassing a stake of more than 10 percent in the company. The company said the plan was not “designed to prevent an offer to acquire the company, but rather allow the board adequate time to consider any and all alternatives,” according to a statement posted to its website. According to the S.E.C. filing on Friday, Mr Icahn plans to engage the company’s board and management in talks and, if necessary, ask for board representation, adding that he hoped to discuss “business and strategies to enhance shareholder value, which may include the pursuit of operating initiatives or the exploration of strategic alternatives.” He followed that up with a tweet, “Hope to continue our streak of value enhancement.” Family Dollar has come under pressure recently. At the beginning of the year, the company lowered its profit forecast for the year. In April, it began to slash prices on the some of its store items and said it would close stores and lay people off to reduce costs. Shares in Family Dollar closed up 13.4 percent at $68.62.