Paul Singer-run Elliott Management is the latest to provide its two-cents on the value of Family Dollar. In 2011, Trian Management tried to buy Family Dollar in an unsolicited tender offer. A year later, Bill Ackman of Pershing Square Management took a large stake in the company and began wondering aloud whether it would be acquired by Dollar General (DG - Get Report) . This June, Carl Icahn took a near 10% stake and called for an immediate sale.
As it turns out, Icahn began buying Family Dollar stock the day the company began exclusive talks on an $8.5 billion merger with Dollar Tree (DLTR) . When that sale was announced in July, Icahn said he was fine with it, but he also argued Dollar General was a better buyer.
Icahn has since sold most of his Family Dollar stock. But, now there is Elliott Management... And after Elliott Management, there could be other hedge funds that emerge from the woodwork.
Paulson & Co. holds an over 7% stake in Family Dollar, filings show, while Glenview Capital Management and Citadel hold 2%-plus stakes. Steven A Cohen's fund holds over 1% of Family Dollar's shares outstanding, according to data compiled by Bloomberg.
Elliott, like Icahn, is accusing Family Dollar's board of directors of running a poor sale process and the fund has nominated seven directors to the company's board. A read through public documents does show a bit of a cat and mouse game between Family Dollar and Dollar General, as the company was engaging Dollar Tree on a merger. But, it's hard to know which party to blame.
With all of these activist hedge funds involved, the deal may ultimately come full circle.
For now, Garden and Trian have come out in support of Family Dollar's $74.50 a share cash and stock merger with Dollar Tree in the face of Dollar General's $80-a-share unsolicited cash offer. Trian doesn't believe Dollar General's offer is actionable given large antitrust hurdles and some skepticism about their commitment to the deal.
As it stands, Trian is voting its stake in favor of the Dollar Tree transaction, alongside CEO Howard Levine, who owns 8% of the company.
It is hard for activists like Elliott and Icahn to accuse a board of being entrenched when one of their own is involved. Something isn't adding up.
The dilemma, perhaps, also underscores how Wall Street's fanciest firms have taken a liking to dollar stores because they are ripe for operational improvement and financial engineering.
Be it Trian, Pershing, Icahn or Elliott - all of these funds appear to be trying to replay KKR's successful buyout and IPO of Dollar General. While Family Dollar is a more crowded dollar store trade in Greenwich and Manhattan than Dollar General's takeover, it hasn't yet lived up to the hype.
Family Dollar shares remain well below the $90-to-$100 a share level where some analysts believe the company will be acquired. In fact, as TheStreet noted on Thursday, investors weren't pricing in a bidding war for Family Dollar or a bump to Dollar Tree's cash and stock offer. Perhaps, that will change.
-- Written by Antoine Gara in New York