Ackman's Pershing Square Now Largest Family Dollar Shareholder
10 June 2011 - 5:43AM
Dow Jones News
Hedge fund manager William Ackman disclosed Thursday that he
recently boosted his ownership of Family Dollar Stores Inc. (FDO)
by about 5 million shares, making his Pershing Square Capital
Management the largest shareholder of the discount retailer.
The move takes his stake to 10.9 million shares, or 8.9% of
Family Dollar, and comes on top of a disclosure last month where he
reported the 5.8-million-share position he built during the first
quarter. He made that disclosure, a day after publicly praising the
stock, in an amended Securities and Exchange Commission filing for
which he had previously requested and received permission to keep
some holdings confidential.
Billionaire Nelson Peltz and his Trian Fund Management LP had
been the largest Family Dollar holder, with a roughly 6.5% stake.
Trian in February offered to buy the rest of Family Dollar for $55
to $60 a share, which the company rejected.
Family Dollar promptly installed a shareholder rights plan, or
poison pill, designed to deter any investor from acquiring 10% or
more of the company without the permission of its board of
directors. Poison pills typically work by promising to massively
dilute the stake of any unwelcome acquisition of stock past a
certain threshold, and the Family Dollar pill should similarly
limit Ackman's ability to add substantially to his position.
At the conference here last month, Ackman said he likes the
Family Dollar business and believes it is poised for a boost to its
share price with the prospect of selling to a strategic buyer like
larger rival Dollar General Corp. (DG) or a private-equity firm.
Smaller competitor 99 Cents Only Stores (NDN) in March received a
going-private bid from acquisitive, retail-focused private-equity
shop Leonard Green & Partners LP and that company's founding
family, which it is still evaluating.
A Trian spokeswoman declined to discuss the Ackman stake
increase, and Ackman didn't promptly respond to an email request
for comment. A Family Dollar spokesman didn't immediately respond
to a telephone message.
"We love them," Ackman said of Peltz and Trian at the
conference. "We just don't like the price."
Unlike Peltz, Ackman's stake remains a passive, not an activist
one.
As a passive holder, Ackman can't yet have had meaningful
conversations with management about Family Dollar's future, nor can
he have plans to do so. It also means he has no existing plan to
make an offer to acquire the company or unseat any of Family
Dollar's current board members, among other things.
Family Dollar stock jumped to an intraday high of $53.45 apiece
soon after Ackman disclosed his increased stake, but had since
given back some of those gains. Nonetheless, shares were still
ahead of levels prior to the Pershing Square filing, up 2.2% at
$52.62 each.
-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171;
maxwell.murphy@dowjones.com
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