Icahn becomes largest shareholder in Family Dollar Stores

Fri Jun 6, 2014 9:13pm EDT

Billionaire activist investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York February 11, 2014. REUTERS/Brendan McDermid

Billionaire activist investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York February 11, 2014.

Credit: Reuters/Brendan McDermid

(Reuters) - Hedge fund billionaire Carl Icahn became the largest shareholder in Family Dollar Stores Inc after reporting a 9.39 percent stake in the company on Friday, and said he may seek representation on its board.

Shares of Family Dollar, struggling under declining sales, rose as much as 12 percent in extended trade on Friday.

At 10.69 million shares, Icahn becomes the largest shareholder in Family Dollar. Chief Executive Officer Howard Levine disclosed a 8.18 percent stake with 9.31 million shares last November, according to Thomson Reuters data.

Activist investor Nelson Peltz-led Trian Partners is the third-largest shareholder with a 7.35 percent stake and 8.37 million shares in Family Dollar, according to a March 31 filing.

In 2011, Family Dollar rejected Peltz's bid to buy the company for at least $7 billion.

Icahn, known for taking big stakes in companies and pushing for management change, said he plans to talk to the low-cost store operator about strategies, which may include the exploration of "strategic alternatives". (r.reuters.com/nev89v)

"Disclosed a 9 percent position in Family Dollar today. Hope to continue our streak of value enhancement," Icahn posted on Twitter.

Family Dollar said its board and management team were open to dialogue with all shareholders.

"As previously announced, we are taking steps to strengthen our value proposition, increase operational efficiencies and improve financial performance," the company said in a statement on Friday evening.

Icahn told FOX Business he would consider pushing Family Dollar for a merger with rival Dollar General Corp.

Dollar General said it did not comment on market speculation.

Family Dollar, which has trailed rivals such as Tennessee-based Dollar General and Dollar Tree Inc, said in April it would close 370 stores and slow its expansion of new stores.

The North Carolina, Matthews-based retailer, which caters to lower-income shoppers, many of whom live paycheck to paycheck, has also slashed prices in an effort to win customers.

Family Dollar shares rose 10.1 percent to $66.60 in extended trade. They closed at $60.53 on the New York Stock Exchange on Friday and are down 6.8 percent year-to-date.

(Reporting by Shailaja Sharma and Sampad Patnaik in Bangalore; Editing by Maju Samuel, Leslie Adler and Bernard Orr)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
0ldRNCowboy wrote:
With this large purchase of Family Dollar stock Icahn knows the “tag a longs” will jump on board to further artificially inflate the stock value of Family Dollar. He’ll dump his position like a hot potato as soon as he clears a meager profit. With almost 10.7 million shares it only takes a paltry per share increase to turn a quick and tidy sum.

Family Dollar reminds me of the old Woolworths, TG&Y, Coast To Coast, Gibson’s, Ben Franklin and other five and dimes. All solid earners until mismanagement and over expansion killed them off. In fact, many of the Family Dollar store district manager/supervisor and store managers are the same people who ran these old stores into the ground. History repeats itself and Family Dollar looks awfully familiar.

Jun 09, 2014 2:32pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.