Not in this Family Dollar Store slighted by Peltz: Sources
Family Dollar wants to keep it in the family.
The dollar-store chain, which has been held by the same family for five decades, yesterday rejected a $7 billion buyout offer from New York hedge-fund tycoon Nelson Peltz and installed a "poison pill" provision to discourage other potential overtures.
A well-placed source said Chief Executive Howard Levine -- whose father founded the discounter in 1959 with a single store in Charlotte, NC -- wasn't amused that Peltz "called just 30 minutes before the filing" that disclosed the takeover bid last month, despite publicly inviting Levine to participate as an investor in the buyout.
"Maybe it was 15 minutes before," the source said.
Since then, there has been no dialogue between Family Dollar and Peltz's investment firm, Trian Partners, the source added.
Indeed, skepticism about the legitimacy of Peltz's offer was widespread after it was disclosed Feb. 15. Shares of Family Dollar rose slightly yesterday to close at $51 -- below the $55 to $60 per-share offer from Peltz.
Family Dollar's board said the offer "substantially undervalues" the company.
Trian declined to comment yesterday, but sources noted that no financing has been lined up and that the bid would require Peltz to pony up as much as $3.5 billion in equity.
Peltz "may be looking for a buyout of Family Dollar, but he's not going to be doing it himself," said one source.
Insiders have speculated that Peltz is angling to push the discounter into the arms of private-equity giant KKR, which completed a lucrative buyout of Family Dollar's archrival, Dollar General, in 2007.
There is skepticism that KKR would deepen its investment in the dollar-store sector, which some investors believe faces a mixed bag amid steep unemployment and high prices for food and gasoline.
Still, efficiencies from a merger of the nation's two largest dollar chains could justify a higher takeout price than the $55 to $60 a share offered by Peltz, sources said.