Family Dollar Lifts Takeover Speculation

Family Dollar Stores, Inc., a regional chain of variety stores in the United States, could be an acquisition target again, two years after activist investor Nelson Peltz tried unsuccessfully to buy the Matthews-based discount retailer.

Family Dollar shares closed Wednesday at $72.42, up almost 6 percent in the last month. Options prices showed record takeover speculation since July 22, according to data compiled by Bloomberg. That’s when a standstill agreement barring Peltz from raising his stake in the company to more than 9.9 percent was lifted.

Private equity bidders could see an opportunity to make Family Dollar more efficient and turn a greater profit, analysts at Edward Jones & Co. said. The retailer’s profit margins lag behind those at Dollar General Corp., which KKR & Co. bought in 2007 and took public two years later.

A buyout by Dollar General, which has more than double Family Dollar’s $8.3 billion market value, may cut costs at the smaller company, Albert Fried & Co. said. Credit Suisse Group said Family Dollar could get as much as a 39 percent premium in a sale. Source

 

Tags: Private Equity, Private Equity firm, Private Equity fund, Private Equity investment, Private Equity group, Family Dollar Stores, Inc., Family Dollar, United States Private Equity, Nelson Peltz, Peltz, Matthews, Bloomberg, Edward Jones & Co., Dollar General Corp., KKR & Co., Albert Fried & Co., Credit Suisse Group.


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