Dollar Tree Inc. hit back at an activist investor Sunday who wanted to replace the entire board. According to the company, the investor Mantle Ridge refused to engage constructively with Dollar Tree and did not want to bring any new ideas to the table.
The board was disappointed with Mantle Ridge, who had proceeded hostile and aggressive. According to Bloomberg News, representatives of Dollar Tree met with a few investors to hear out their ideas. A few of them demanded that the former chairman of Dollar General Corp., Richard Dreiling, be appointed as executive chairman.
The company has offered a settlement in which Dreiling would be appointed to the board, and this would have given the activist Ridge a firm role in the new director’s appointment. However, the company did not hear from the firm as it nominated 11 new directors in place in the entire board last week.
According to the statement, the only suggestion was to sell Dollar Tree products at the Family dollar store, and the former has already been doing this for several years.
Mantle Ridge, who owns 5.5% percent shares in Dollar Tree, had demanded a leadership role for Dreiling and replacement of all 11 directors in a regulatory filing on Friday.
The shares of Dollar tree have risen by 31% since Bloomberg News reported on November 4 that Ridge was talking to investors about building his stake in the company. The shares rose to $141.55 Friday in New York trading, up by 2.3%. The current market valuation of the company is $32 billion.
Based out of Chesapeake, Virginia, Dollar tree traces its roots back to the 1950s as a variety store. The company pioneered that concept of selling everything for $1, right from toys to toothpaste. However, the rising inflation, supply chain crunch, and changing consumers’ tastes hit the company’s bottom line as Dollar Tree and Family Dollar Stores are beginning to move away from the business model.
In November, Dollar Tree Inc. had announced that it would raise the standard point to $1.25 for its products by April. It noted that the share prices favorably responded to the move.
In a statement Sunday, the company said that this decision was taken after careful planning and continued to provide assortments with value to its customers.
The converted Dollar Tree store’s operational performance has validated the earlier tests and demonstrated the successful execution of its strategy.
Dollar Tree said that its directors have the desired experience. The handpicked nominees of Mantle Ridge are drawn from companies where Ridge has a strong influence, if not total control, which is not a good corporate governance model.
