Carl Icahn Acquires Over 9% Stake in Family Dollar Stores Inc. (FDO); Seeking Dialogue To Enhance Value

Billionaire Carl Icahn has disclosed a new position in Family Dollar Stores Inc. (NYSE:FDO), which is engaged in operating a chain general merchandise retail discount stores in the United States. According to a new filing with the U.S. Securities and Exchange Commission, Mr. Icahn owns around 10.69 million shares, including options to purchase shares. The stake represents 9.39% of the company’s common shares.

Mr. Icahn sees great long-term potential in Family Dollar Stores Inc. (NYSE:FDO) industry and intends to talk with the company’s senior management and board of directors to discuss the company’s business and strategies to enhance shareholder value, according to the filing. Mr. Icahn may also determine to seek shareholder board representation.

In a statement, Family Dollar Stores Inc. (NYSE:FDO) said that its board of directors and management team are open to dialogue with all shareholders and welcome input toward the shared goal of enhancing value.

“We are taking steps to strengthen our value proposition, increase operational efficiencies and improve financial performance. We are committed to driving value for all Family Dollar shareholders and will continue to take actions to achieve this important objective,” the company said in a statement.

Recently, the company said that its board has adopted a one-year shareholder rights plan, according to a statement. The rights plan, which has a 10% beneficial ownership threshold and may be amended, redeemed or terminated by the board at any time prior to being triggered, will help the board protect shareholders against any person or group gaining control of the company by open market accumulation or otherwise without paying a control premium for all shares.

Shares of Family Dollar Stores Inc. (NYSE:FDO) rose more than 12% to $68.97 on June 9. The consensus average target price is $56.50, and the consensus average recommendation is ‘Hold’.

For the second quarter of fiscal 2014, the company reported net income of $90.9 million, down from $140.1 million in the same period in 2013. Earnings per diluted share in the second quarter were $0.80, compared to $1.21 in the second quarter of fiscal 2013. The company’s net sales decreased 6.1% to $2.7 billion from $2.9 billion in the second quarter of fiscal 2013.

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