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.
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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