WASHINGTON (dpa-AFX) - Activist investor Elliott Advisors (UK) Ltd on Friday nominated seven candidates to the board of discount retailer Family Dollar Stores Inc (FDO) and urged the company to weigh a superior acquisition offer from rival Dollar General Corp (DG).
Family Dollar, which agreed to be acquired by Dollar Tree Stores Inc (DLTR), is fending off a takeover bid by rival Dollar General Corp (DG), whose superior offer it has repeatedly spurned.
Elliott, which revealed a 4.9 percent stake in Family Dollar, said it announced the slate of board nominees in the interest of shareholders and that Family Dollar should provide a level playing field to Dollar General in its bid for the company.
Elliott said the leadership at Family Dollar missed an opportunity to facilitate a bidding war between Dollar Tree and Dollar General.
In July, Family Dollar agreed to be acquired by Dollar Tree for $74.50 per share in a cash and stock deal valued at $9.2 billion, and in August, Dollar General made a superior all-cash proposal to buy Family Dollar for $78.50 per share or $9.7 billion to thwart the Dollar Tree bid. But Family Dollar rejected the bid, citing antitrust regulatory considerations, and reaffirmed its merger deal with Dollar Tree.
Dollar General sweetened its offer by $1.50 to $80.00 per share, and also raised the number of stores it was willing to divest if ordered by the FTC, but Family Dollar again rejected it.
Elliott said its reservations about the company's merger deal with Dollar Tree have increased in light of the board's rejection of Dollar General's superior bid. ?
'It is our view that the company was in a position earlier this year to facilitate a bidding war between two large, well-capitalized strategic acquirers. This opportunity appears to have been missed, and the company must now seek to maximize value for shareholders with the restrictive covenants and other practical limitations of a merger agreement in place,' Elliott said.
Family Dollar's board has 11 directors.
Last week, Family Dollar received a request for additional information from the Federal Trade Commission in connection with the unsolicited conditional tender offer to acquire all of the outstanding common stock of Family Dollar commenced by Dollar General. Dollar General also received a request for additional information from the FTC.
FDO closed Friday at $76.77, up $0.40 or 0.52%, on a volume of about 2 million shares on the NYSE. In after hours, the stock gained $0.78 or 1.02% at $77.55.
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