Investor Carl Icahn has asked retailer Family Dollar to put itself up for sale immediately, threatening a proxy war to replace the company’s entire board if a sale process is not started. Icahn, who became Family Dollar’s largest shareholder earlier this month, also asked that three of his representatives be added to the company’s board immediately and be part of a new committee tasked with finding a buyer.
“Although we appreciated the cordial nature of our discussion at last night’s dinner, it was apparent that we have a strong difference of opinion as to the future of our company,” Icahn said in a letter to Family Dollar’s CEO Howard Levine.
Family Dollar’s shares rose about 3% to $70 in extended trading, after closing at $68.14 on Thursday, valuing the company at about $7.77 billion.
Icahn said he believed the company would attract significant interest from strategic and financial buyers and that this was “a perfect time to sell, given the advantageous stock market and interest rate environment.”
He warned he would approach shareholders directly by starting a written consent solicitation within the next few weeks if the company did not act immediately.
Family Dollar responded on Thursday, saying the company was confident that its “immediate, strategic actions” to improve its performance would position it to deliver stronger returns for its shareholders.
“We believe the company has been in limbo for far too long,” said Icahn, who has a 9.39% stake in Family Dollar, adding that he believed an overwhelming majority of the company’s shareholders would favor a sale.
After Icahn disclosed his stake, Family Dollar adopted a shareholder rights plan, also known as a “poison pill”, with a trigger at 10% to buy time to consider any possible deal that Icahn could push for.
Family Dollar is struggling with falling sales. The company said in April that it would close 370 stores, slow its expansion of new stores and slash prices.
The company’s stock has risen nearly 8% in the past year, well below the 20% percent rise in the S&P 500 index.