A hedge fund on Friday said it was nominating seven directors to Family Dollar’s board in an effort to ensure the retailer does “everything in its power” to give rival Dollar General a chance to buy the company.
In July, Matthews, N.C.-based Family Dollar agreed to be acquired by Dollar Tree for $74.50 a share in cash and stock, or $8.5 billion. But rival Dollar General has since made a hostile $80-per-share offer totaling $9.1 billion that Family Dollar’s board has rejected.
In a letter sent to Family Dollar CEO Howard Levine, Elliott Advisors said it was concerned that some members of the current board may lack the expertise and independence to “successfully navigate and negotiate a value maximizing outcome for all shareholders.”
The hedge fund said its slate of directors has the experience to aid negotiations with Dollar Tree and Dollar General. Elliott said it owns 4.9 percent of Family Dollar’s outstanding shares.
Family Dollar representatives could not immediately be reached late Friday.
A majority of the 11-member board has strong North Carolina or Charlotte ties, including Queens University President Pamela Davies, N.C. Secretary of Commerce Sharon Decker, former N.C. Gov. Jim Martin and retired Family Dollar general counsel George Mahoney Jr.
In its letter, Elliott specifically called out Mahoney. The hedge fund said he was the wrong choice for a member of an independent committee created in January that explored the company’s alternatives.
“We … question the decision to appoint George Mahoney Jr. to the committee given that he has been associated with Family Dollar, initially as an employee and subsequently as a member of the board, since 1976,” the hedge fund wrote. “More generally, Elliott believes that this committee is of limited value to shareholders as long as the remainder of the board lacks the relevant independence and/or expertise.”
Activist investor Carl Icahn, who pushed Family Dollar to merge with Dollar General when he owned almost 10 percent of the company, has also criticized Family Dollar’s board, saying it wasn’t appropriately concerned with maximizing value for shareholders.
The directors proposed by Elliott include Fredric Reynolds, former chief financial officer of CBS; Jonathan Macey, corporate-law professor at Yale Law School; and two Elliott portfolio managers.