Activist investor Carl Icahn had been trying to bring Dollar General Corp. (NYSE:DG) together with Family Dollar Stores, Inc. (NYSE:FDO). Family Dollar ended up announcing a deal with Dollar Tree, Inc. (NASDAQ:DLTR), and Icahn called that a win even though it wasn’t the exact combination he was looking for.

carl icahn

Now, however, he questions why Family Dollar wouldn’t have wanted to make sure that Dollar General wasn’t interested before it agreed to a $305 million breakup fee with Dollar Tree if the deal doesn’t happen.

Icahn, Dollar General CEO surprised

Dollar General CEO Rick Dreiling said in a statement after his company announced a bid for Family Dollar today that they had been pursuing the discount retail chain for years. He added that they were “very surprised” by the announcement from Family Dollar and Dollar Tree. In addition, he said if he had thought the company was “in play, he probably wouldn’t have announced his retirement.

Icahn says he was surprised to know that Dollar General had been interested. He notes that the $305 million breakup fee in the agreement with Dollar Tree was likely meant to avert other bids. But because the company was so quick to agree to a breakup fee without looking for other potential buyers, he thinks management may have been motivated to see the Dollar Tree deal through.

Icahn questions Family Dollar CEO’s involvement

In a statement posted on his website, Shareholders’ Square Table, Icahn suggests that Family Dollar CEO Howard Levine might have nailed down “a future role” in a merged Dollar Tree / Family Dollar. Dreiling had said that for a number of years, he had been trying to buy Family Dollar, so Icahn said it “seems obvious” that in a merger between Dreiling’s company and Family Dollar, Levine might not have had a future role. He had some harsh words not only for Family Dollar, but also for company boards in general:

“How far will crony Boards go (and get away with it legally) to protect the CEO at the expense of shareholders?” Icahn wrote “At too many companies in America the hubris of the CEO, supported by a crony Board, costs shareholders billions of dollars, and worse, it costs our economy even more.”