Activist investor Carl Icahn is wasting no time in moving in on Family Dollar Stores, Inc. (NYSE:FDO). Within less than two weeks of becoming the company’s biggest shareholder, he’s calling for the discount retail chain to put itself up for sale immediately. Icahn sent a formal letter to Family Dollar management and filed a copy of it with the Securities and Exchange Commission.
Icahn tweets about Family Dollar
As has been his tactic since signing up for Twitter, Icahn tweeted about it and linked the regulatory filing for all to see:
— Carl Icahn (@Carl_C_Icahn) June 19, 2014
Icahn dines with Family Dollar management
In the letter, Carl Icahn references a dinner he had this week with Family Dollar Stores, Inc. (NYSE:FDO) Chairman and CEO Howard Levine. Apparently the two strongly disagreed about what is best for the retail chain’s future. Icahn says the company has “consistently underperformed its peers on most, if not all, operating metrics.” He also notes that its stock has underperformed the stocks of its peers and also the S&P 500 Index over the last one- and three-year periods.
Then he emphatically says: “It is imperative that Family Dollar be put up for sale immediately.”
Why Carl Icahn thinks Family Dollar should be for sale
The activist investor said he thinks both financial and strategic buyers would show “significant interest” in acquiring Family Dollar Stores, Inc. (NYSE:FDO). He thinks that this is the “perfect time” for the company to sell itself because of the current stock market condition and interest rate environment. He also thinks that the greatest majority of the retail chain’s shareholders would favor a sale.
He says consolidation in the segment is simply “inevitable” and that he thinks Family Dollar “has been in limbo for far too long.”
Icahn threatens action
Carl Icahn also said they want three of their representatives to be added to Family Dollar Stores, Inc. (NYSE:FDO)’s board of directors “immediately.” He urged the company to create a committee that would begin approaching potential buyers. He said if management doesn’t agree to collaborate with them on a sale, then they will solicit shareholders to remove all of the retail chain’s board members and replace them with “individuals that will have a shareholder mandate to sell the company.”