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Actually, you are incorrect. The company is profitable. And this guy purchased shares for the sole reason of forcing a sale.
You are correct that the company is profitable, but due to poor management it's underperforming relative to it's peers. Should the shareholders accept mediocrity because the company "is profitable"?
Family Dollar's return on equity has fallen 800 basis points since the fiscal year ended Aug. 27, 2011.
Capital expenditures have increased some five times from the fiscal year ended Aug. 29, 2009 as Family Dollar has added in excess of 1,000 stores and remodeled existing locations. Yet, Family Dollar's operating margin peaked in the fiscal year ended Aug. 27, 2011.
Family Dollar's operating margin is more than half that of Dollar Tree, and roughly 40 percent of Dollar General.
Family Dollar has the worst sales-per-square-foot in the publicly-traded dollar-store industry, despite remodeling stores into new layouts and exterior banners that gleam from the highway.
Family Dollar's current real-estate strategy is to not own stores. Since the end of fiscal 2012, Family Dollar has sold 532 stores in leaseback transactions for $694 million in proceeds, or $256.3 million after-tax. These funds have been plowed back into new store openings.
Given the execution of Family Dollar's management, Icahn is basically saying that shareholders should not trust the executive team to reinvest proceeds from asset sales due to mounting impairment charges in the present.
Company X made 10 Billion in profit last year
Company Y made 12 Billion in profit.
Shareholder says Company X is badly managed. As a shareholder, I insist they merge with Y for greater profits.
Shareholder make money, but everyone else gets screwed.
With that train of thought, every other store should just merge with Walmart. That will decrease costs and increase profit for the owners.
The investor is the OWNER. Of course there is an expectation of maximizing profits and this isn't the first opportunity that FD has had to make changes in order to meet their obligations to shareholders. Nelson Peltz fired a shot a few years ago and FD has done nothing but under perform since then.
A merger with DG is an extreme long shot, they've been using all their free cash in stock buy-backs. The more likely scenario is that FD goes private. Unfortunately some people will "get screwed" as you put it, but in the long run jobs will be saved and the company will be much healthier.
Matthews headquarter Family Dollar acquired by Dollar Tree
Matthews-based Family Dollar Stores will be bought by leading discount retailer Dollar Tree, Chesapeake, Va.-based.
The companies announced Monday morning. Dollar Tree will pay $8.5 billion in the cash-and-stock deal — $74.50 a share, a 22.8% premium over Family Dollar's Friday closing price.
Family Dollar employs about 1,400 people at its headquarters on Monroe Road in Matthews.
For the Charlotte region, the deal represents the loss of another major corporate headquarters, following Harris Teeter’s acquisition by Kroger and Chiquita’s plans to relocate to Ireland.
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Dollar Tree has bought Family Dollar: The Levines have been deposed
