Mon June 9, 2014
Family Dollar Implements Poison Pill
Family Dollar is attempting to avoid a potential hostile takeover after an investor announced Friday he bought a nearly 9.5 percent stake in the Matthews-based company.
The company has implemented what’s called a “poison pill.” That’s a strategy companies use to make an acquisition less enticing. One way a poison pill can be used is by offering current shareholders preferred stock that they can then turn around and sell for a higher premium once their company is taken over. That makes an acquisition more expensive.
Carl Icahn’s purchase of the nearly 9-and-a-half percent Family Dollar stake makes him the company’s largest shareholder. Icahn has said he’s considering pushing Family Dollar to merge with rival Dollar General, and that he may also pursue a seat on the company board.
Family Dollar says the poison pill measure is designed to prevent any one investor from purchasing a 10 percent or greater stake in the company. The discount chain also says the plan is not intended to prevent an offer to acquire the company, but rather a way to allow board members enough time to consider alternatives.