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Icahn Purchase Prompts Family Dollar Poison Pill

Tuesday June 10th, 2014 - 1:26PM


Family Dollar Stores, Inc. has announced that its board of directors has adopted a one-year shareholder rights plan, or poison pill, in the wake of activist investor Carl Ican taking a stake in the company. On May 27, Icahn Capital LP, in a filing with the United States Securities and Exchange Commission, stated that it controlled 10,691,011 Family shares and options to purchase shares, representing approximately 9.39% of the issuer's outstanding stock.

Icahn's position in Family Dollar became more widely known on Friday, when the investors Tweeted about the move.

In the aftermath, Family Dollar filed the poison pill plan with the SEC, relating in a statement that all of the company's directors voted for its adoption except Edward Garden, who voted against the plan. Garden is a founder and chief investment officer of Train Partners, another major Family Dollar stockholder.

The shareholder rights plan, which has a 10% beneficial ownership threshold and may be amended, redeemed or terminated by the board at any time prior to being triggered, will help the company protect shareholders against any person or group gaining control of Family Dollar by open market accumulation or otherwise without paying a control premium for all shares, the retailer stated. The plan, Family Dollar asserted, will allow the board adequate time to consider any and all alternatives to an open market bid to control the company.