MATTHEWS, N.C. — Family Dollar Stores Inc. has received an unsolicited conditional proposal from investor Nelson Peltz’s Trian Group to acquire the chain for a price between $55 and $60 per share, or as much as $7.6 billion in cash.
Family Dollar Stores Inc. has received an unsolicited conditional proposal from investor Nelson Peltz’s Trian Group to acquire the chain for a price between $55 and $60 per share, or as much as $7.6 billion in cash.
Trian Group already holds a 7.9% stake in Family Dollar, which has engaged Morgan Stanley & Co. as its financial advisor.
In mid-day trading, Family Dollar’s share price had soared 21.8% to $53.54 per share on the news, which also lifted the share price of other small-box discount retailers including Dollar General Corp., Dollar Tree Inc. and Fred’s Inc. The offer represents a premium of up to 36% above yesterday’s closing price ($43.96) of Family Dollar shares.
Some analysts have suggested that Trian Group’s offer might trigger competing bids from other private equity players. Others express doubt that Peltz could assemble the equity and debt to finance a $7 billion leveraged buyout and speculate that Trian Group might be looking to recoup losses suffered since it took a stake in Family Dollar last year.
Family Dollar’s stock had lost more than 11% of its value since the beginning of the year, falling 8.8% on January 5 when management announced that same-store sales growth had slowed to 4% and predicted slower growth for the rest of the year.
Family Dollar is the latest mass market retailer to entertain an offer or express interest in a buyout. In recent weeks BJ’s Wholesale Club Inc. announced it is exploring a possible sale while press reports have claimed that Big Lots Inc., the nation’s largest closeout retailer, was considering a buyout.