DOLLAR TREE, INC.

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Activist investor Mantle Ridge nominates 11 to Dollar Tree board

12/10/2021 | 07:11pm EDT
Products are seen on display at a Dollar Tree discount store in Garden City, New York

(Reuters) - Activist investment firm Mantle Ridge wants to overhaul Dollar Tree's board and would like the company to hire the former chief executive of rival Dollar General Corp as it pushes for a review of the retailer's business strategy.

Mantle Ridge, which owns a $1.8 billion stake in the retailer, has nominated 11 people, including its founder Paul Hilal, to Dollar Tree's 11-member board, according to a regulatory filing made late on Friday. The entire board is up for re-election at next year's annual meeting.

The company "will benefit from a refresh of the membership of the Board," the filing said.

The investment firm also said it wants the board to consider hiring Richard Dreiling, who had been a chief executive and chairman at Dollar General, to a leadership role. Dreiling was not nominated as a director candidate by Mantle Ridge.

Dollar Tree did not immediately respond to a request for comment.

J.P. Morgan analysts said last month the involvement of Dreiling at Dollar Tree could be a "potential game-changer", adding that he was the architect of Dollar General's turnaround story from 2008 to 2015 that saw its revenue double.

Mantle Ridge and its advisors have met with Dollar Tree's board to discuss the investment firm's concerns about company's lagging stock price and other issues, the filing said. Over the last five years Dollar Tree's stock price has gained 68.11%, lagging rival Dollar General Corp's 188.46% gain.

While Mantle Ridge said it wants to continue talking with Dollar Tree, it was forced to nominate directors now because its discussions likely will not be completed before the four week-long window to nominate directors closes later this month.

Dollar Tree recently reported a 4% rise in net sales, even as its net income declined.

Mantle Ridge has an economic interest of 9.85% in the company, including 5.7% of common stock and 4.19% in cash-settled derivatives.

Chesapeake, Virginia-based Dollar Tree is currently valued at $31.8 billion and bought a rival chain Family Dollar in 2015.

Dollar Tree traditionally sold items for one dollar but said last month that it would raise prices of most goods to $1.25 by the end of April in the wake of spiraling freight costs and other pandemic-driven challenges.

The retailer faced off against another activist investment firm in 2019 when Starboard Value urged the retailer to consider raising its prices.

Mantle Ridge traditionally makes an investment in only one company at a time and has previously targeted railroad CSX Corp and food service company Aramark. Both companies appointed new chief executives soon after Mantle Ridge arrived and began pushing for changes.

Hilal previously worked at Pershing Square Capital Management, an activist hedge fund run by his college roommate, William Ackman.

(Reporting by Svea Herbst-Bayliss in New York and Praveen Paramasivam in Bengaluru; Editing by Shounak Dasgupta and Edmund Klamann)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ARAMARK 1.18% 32.65 Delayed Quote.-11.40%
CSX CORPORATION 0.94% 31.23 Delayed Quote.-17.71%
DOLLAR GENERAL CORPORATION 3.64% 194.42 Delayed Quote.-17.56%
DOLLAR TREE, INC. 1.65% 129.99 Delayed Quote.-7.49%
LOWE'S COMPANIES, INC. 0.84% 186.25 Delayed Quote.-28.55%
PERSHING SQUARE HOLDINGS, LTD. 2.44% 31.45 Real-time Quote.-23.48%
TREE HOLDINGS LIMITED 7.32% 0.88 Delayed Quote.1.15%
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Analyst Recommendations on DOLLAR TREE, INC.
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Financials (USD)
Sales 2023 27 890 M - -
Net income 2023 1 776 M - -
Net Debt 2023 2 573 M - -
P/E ratio 2023 16,4x
Yield 2023 -
Capitalization 29 322 M 29 322 M -
EV / Sales 2023 1,14x
EV / Sales 2024 1,08x
Nbr of Employees 136 226
Free-Float 98,6%
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Mean consensus OUTPERFORM
Number of Analysts 26
Last Close Price 129,99 $
Average target price 159,95 $
Spread / Average Target 23,1%
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Managers and Directors
Michael A. Witynski President, Chief Executive Officer & Director
Kevin S. Wampler Chief Financial Officer
Richard W. Dreiling Executive Chairman
James A. Paisley Chief Information Officer
Thomas R. O’Boyle Chief Operating Officer
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