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August 19. 2014 6:26PM

Icahn roasts Family Dollar’s board as Dollar General bid looms

With a $9.7 billion upset bid from Dollar General threatening to upset the North Carolina-based Family Dollar’s planned acquisition by another competitor, the Family Dollar’s board of directors is in a vocal critic’s crosshairs for not moving more aggressively to combine with Dollar General earlier.

Family Dollar’s 11-member board voted unanimously last month to sell the company to Dollar Tree, based in Virginia. Dollar Tree offered Family Dollar $74.50 a share, made up of $59.60 cash and $14.90 worth of Dollar Tree stock. But on Monday, Tennessee-based Dollar General announced it was offering $78.50 a share, 5.4 percent higher than Dollar Tree.

Now it’s up to the board of directors — many of whom have long-term ties to Family Dollar, Charlotte and North Carolina — to decide between the two offers. Dollar Tree has said they will leave many of the company’s 1,400 jobs in North Carolina and continue to operate Family Dollar as a separate store brand, and Levine would stay on with the combined company for at least two years.

Meanwhile, Dollar General hasn’t said what might happen to the Family Dollar brand or its suburban Charlotte headquarters. Analysts, however, have speculated that the close similarity of Dollar General and Family Dollar’s business models would lead to massive cuts.

Activist investor Carl Icahn, who had been pushing for a sale of Family Dollar since announcing in June that he owned 9.4 percent of the company, slammed Family Dollar’s board. In a statement posted online, Icahn called the directors “a crony board” more concerned with ensuring Levine, son of founder Leon Levine, gets to keep a job than with getting the most money for shareholders.

“Could the fact that Family Dollar’s CEO, Howard Levine, has a future role in a Dollar Tree/Family Dollar merger have anything to do with it?” Icahn wrote. “How far will crony Boards go (and get away with it legally) to protect the CEO at the expense of shareholders?”

Icahn, who has sold down his stake in Family Dollar to 3.6 percent, continued his blitz in a round of national media interviews Tuesday.

“Listen, (Levine’s) father started the company, and he thinks it’s his,” Icahn told Fox Business News. “But it isn’t, and he doesn’t know what he’s doing.”

A Family Dollar spokeswoman declined to address Icahn’s remarks.

“We have no comment on Mr. Icahn’s opinions,” said Family Dollar vice president of investor relations Kiley Rawlins. No board members or executives were available for interviews.

But in a recent interview with the Charlotte Observer, Levine, who is chairman of the board in addition to being CEO, defended the directors’ actions.

“Our board did what they were supposed to do,” Levine said. “The process our board went through started way before Carl got in the middle.”

Icahn, a longtime investor with a $24.5 billion net worth, had pushed for a combination with Dollar General, not Dollar Tree. In securities filings, Family Dollar and Dollar Tree have said talks between Family Dollar and “Company A” — which appears to be Dollar General — fell apart because Company A didn’t want to deal with Icahn.



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