Activist investor Carl Icahn on Friday reported a 9.4% stake in Family Dollar, making him the company’s largest shareholder and prompting concerns of a hostile takeover.
Family Dollar has responded by adopting a one-year shareholder rights plan with a 10% trigger that would prevent any investor from gaining a controlling interest of the company without board approval.
According to the company, the rights plan is not designed to prevent Family Dollar from being acquired, but rather to give the board adequate time to consider any and all alternatives that may be forthcoming as a result of Icahn’s disclosure. The rights plan may be amended, redeemed or terminated by the board at any time prior to being triggered, the company said.
All but one of the company’s directors — Edward Garden — voted in favor of adopting the rights plan.
Morgan Stanley & Co. Incorporated is acting as financial adviser to Family Dollar and Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel.
Meanwhile Icahn has responded to Reuters regarding the company’s move, reportedly saying that the Family Dollar poison pill is a “quintessential example” of attorneys “simply earning fees,” adding that the move “puts a damper” on attempts to having a “friendly dialogue” with company executives.