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Old 06-20-2014, 05:02 AM
 
2,340 posts, read 4,614,460 times
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Can someone explain why this person is called an activist investor? Why buy stock in a company to force a merger to another company??

This just seems wrong.
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Old 06-22-2014, 09:05 AM
 
1,585 posts, read 1,920,730 times
Reputation: 4958
My theory:

As an activist investor, he likes the company but hates the management. The sale is a threat to get his people on the board so they can get rid of management or sell the company and the new owners will get rid of current executives.

Either way he believes management is what is holding the company down and by getting rid of them the company can become profitable therefore giving him a good ROI as a majority stockholder. In the case of a sale as a majority stockholder he can get a premium for his shares also giving him a good ROI.

It could be along those lines or something completely different in his mind. The man is worth 24 billion and does this for a damn good living, he's got some gameplan to make it a good investment.
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Old 06-22-2014, 04:40 PM
 
52,433 posts, read 26,445,150 times
Reputation: 21093
He destroyed TWA with this strategy and walked away with a $1/2 billion from the carnage. I feel bad for the employees at FDS.
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Old 06-22-2014, 08:04 PM
 
527 posts, read 737,017 times
Reputation: 267
Family Dollar needs to be taken private so that they can get their house in order. KKR did the same thing with Dollar General in 2007 and it turned out to be a good move for the longer term.
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Old 06-23-2014, 06:16 AM
 
1,585 posts, read 1,920,730 times
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Quote:
Originally Posted by WaldoKitty View Post
He destroyed TWA with this strategy and walked away with a $1/2 billion from the carnage. I feel bad for the employees at FDS.
This is the best thing for FDS employees, without these forced changes they were on borrowed time, Family D is simply not making money in it's current condition. At some-point every single one would have been out of a job.

Hopefully with the "Icahn Effect," FD can get the jump start they need, right the ship and become profitable again which would be a win for everyone. If it goes the way TWA did and doesn't work, well it would have done that anyway without Icahn.
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Old 06-23-2014, 06:36 AM
 
Location: South Carolina
21,007 posts, read 27,070,643 times
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Family Dollar is undergoing operations issues. It needs to find ways to make itself compete better against Dollar General, Dollar Tree and similar competitors. I am not sure opening tons of new stores each year and closing 380 at the same time is the way to go.
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Old 06-23-2014, 07:09 AM
 
2,340 posts, read 4,614,460 times
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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.

I don't get how forcing a merger is good for the employees of a profitable company. After much reading this weekend, I now see what folks meant when they talked Romney's business history. I ust don't see how this is a good thing for anyone. Profitable businesses can't get content with making a nice profit. Big money wants them to merge with the end result being decreased jobs, decreasing choice and competition for the consumer but billions in profit for a small few.




Quote:
Originally Posted by chb119 View Post
This is the best thing for FDS employees, without these forced changes they were on borrowed time, Family D is simply not making money in it's current condition. At some-point every single one would have been out of a job.

Hopefully with the "Icahn Effect," FD can get the jump start they need, right the ship and become profitable again which would be a win for everyone. If it goes the way TWA did and doesn't work, well it would have done that anyway without Icahn.
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Old 06-23-2014, 07:13 AM
 
Location: Charlotte
162 posts, read 399,514 times
Reputation: 124
In my very limited business knowledge- this to me is an example of how the greatest thing about this country is also the worst. I can buy stock in a company, become a majority owner, and pretty much dictate what happens based on my owning that majority....without having any knowledge of business or the company. And like waldokitty said, destroy the company, put thousands of people out of a job, but walk away with giant lump sum of money. It just doesn't make sense how this happens and is allowed.
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Old 06-23-2014, 07:45 AM
 
Location: Concord, NC
1,241 posts, read 2,310,601 times
Reputation: 844
I see nothing wrong with it. An owner can do whatever they want with the business they own.
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Old 06-23-2014, 08:59 AM
 
564 posts, read 1,448,724 times
Reputation: 295
That is the risk of going Public. He only purchased shares to sell this company and make Millions if not Billions. He could care less about any of the employees. He is your typical Gordon Gecko.
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