No More Change For Family Dollar (FDO)

Family Dollar Stores, Inc. FDO shares are down on a day when the market is ripping higher, as the company has voted unanimously against the offer from Nelson Peltz. Peltz had offered around $7 billion for the company, at a share price of $55 to $60 per share, but the company said that the bid “substantially” undervalues its business. It also put a poison pull in to place, to defend itself from unsolicited offers. The company has said that the best way to deliver shareholder value is to accelerate store openings and remodelings, and to repurchase shares. This plan was put in place last year. Peltz also doesn't have the financing in place for the offer, which led to additional skepticism. He needs to raise an additional $3.5 billion, according to David Faber of CNBC. Matt Arnold, an analyst at Edward Jones & Co. said that Family Dollar probably won't get a hider bid. “Family Dollar is still run by a member of the founding family. Usually people in that position are passionate about maintaining control of day-to-day decisions.” CEO Howard Levine is the son of the founder of the company. The Trian offer is “not in the best interest of shareholders,” the discount retailer said. Trian Fund Management still owns about 8% of the company. Benzinga has talked about this offer when it was made public, and laid out the thesis to readers to consider moving away from their positions, based on negatives in the letter Peltz and Trian had written to the board. Investors who continue to believe this would be wise to go elsewhere for the time being. There is just too much uncertainty here.