After Thursday’s market close, Carl Icahn announced in a letter to Chief Executive Howard R. Levine, his interest in Family Dollar pursuing a sale “immediately.” Shares jumped 2.7 percent on the news, adding even more value to the discount retailer’s market cap that has already been greatly affected since Ichan disclosed his 9.39 percent stake on June 6.
Traders on Stocktwits.com are following in Carl’s footsteps, suggesting a sale or potential merger could be value accretive to current shareholders, but overwhelmingly the crowd doesn’t see his hurry.
In 2011, Nelson Peltz played a similar tune, but wasn’t nearly as voracious as Icahn. After amassing a 7.9 percent stake and offering to buy the company, Peltz threw in the towel once he was awarded a single Family Dollar board seat.
Ichan wants three board seats instead, and plans to engage in a proxy fight if he doesn’t get what he’s looking for. But with the existing shareholder rights plan in place, also known as the “poison pill” tactic, Icahn’s success will be determined by his bureaucratic tenacity, not his deep pockets.
That said, institutions are giddy for some potential M&A.
Goldman Sachs’ analyst Stephen Grambling has assured investors that Icahn isn’t swinging too wildly, suggesting, “potential synergies could occur” if a deal with another retailer were done. Still, the hurried, aggressive tactics looks to be straight from Icahn’s playbook, and remind investors of his recent fights with Apple, eBay and Dell.