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2:57 pm
Mon July 28, 2014

How Much Will Icahn Pocket In Family Dollar Sale? (Hint: A lot)

Activist Investor Carl Icahn
Activist Investor Carl Icahn
Credit Courtesy of Carl Icahn's Twitter page

How much is it worth to get your way? Sure, bragging rights and a sense of satisfaction may be priceless, but few would turn down the check billionaire investor Carl Icahn is set to get now that Dollar Tree intends to purchase Family Dollar for $8.5 billion.

Icahn isn’t the only shareholder that will make money in the Family Dollar sale. Each share of the Matthews-based company will be bought at a 23 percent premium, but that return is dwarfed by what the activist investor or corporate raider (depending on your point of view) is poised to see.

Poonam Goyal breaks it down for us. She’s a retail analyst with Bloomberg Intelligence. She says Icahn’s first step was to buy 1,312,947 shares of Family Dollar stock at $58.20 per share. That purchase totaled some $76 million dollars. But that was just the beginning, says Goyal, because "then he bought a ton of options amounting to $189 million."And those options were purchased at a discounted $38 dollars per share. Icahn ended up owning 9.4 percent of the company’s stock, making him the largest shareholder.

So how much money will Icahn make in the sale? Goyal calculated the value of the buyout against the cost of all those actual shares and options Icahn purchased and she found that Icahn will have made $172 million dollars in less than 60 days. That’s a 65 percent gain on his investment.