In the wake of a the disclosure of a sizable investment by activist investor Carl Icahn, Family Dollar Stores on Monday said it has adopted a shareholder rights plan.
The so-called “poison pill” would be triggered when a shareholder accumulates more than 10% of the company’s outstanding stock, forcing investors who would acquire more than 10% pay a significant premium.
Icahn on Friday said he and associated funds had acquired 9.4% of Family Dollar’s outstanding stock for $265.8 million in a series of open-market acquisitions. In a filing, the funds said they saw “great long-term potential” in the discount industry but that they felt the shares in Family Dollar were undervalued. They said they would seek converstations with management and potential board representation.
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Family Dollar’s board in a statement said it and the retailer’s management team “are open to dialogue.”
Icahn is the only the latest activisit investor in Family Dollar. Nelson Peltz’ Trian Group acquired more than 8% of company stock in 2010. Peltz’ group was later granted a board seat. Family Dollar is in the midst of a strategic shift built around a return to everyday low prices and a round of more than 400 store closures.
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