Billionaire activist investor Carl Icahn said late Monday that efforts by Family Dollar's board to fend off competing bids in favor of a deal with Dollar Tree have resulted in more than $300 million being needlessly spent on breakup fees.
Icahn has pushed Family Dollar to sell itself to Dollar General and has been openly critical of Family Dollar chief executive Howard Levine, who would have retained his position after an acquisition by Dollar Tree.
On Monday, Dollar General offered to buy Family Dollar Stores for $8.9 billion, trumping an agreed-to merger with its rival Dollar Tree and aiming to strengthen its dominance of a growing segment of retailers serving penny-pinching customers.
Dollar General also has offered to pay the $305 million breakup fee that would be owed to Dollar Tree if its deal with Family Dollar were to fall apart. However, Icahn criticized Family Dollar for agreeing to the large breakup fee.
"This is a quintessential example and a reflection of what is wrong with Corporate America," Icahn said. "The Family Dollar board is wasting more than $300 million in an attempt to chill a competing bid from Dollar General, which would keep Howard Levine out of the company once and for all even though the Dollar General bid would enhance the value of Family Dollar stock."
Icahn, who in June took a 9.4 percent stake in Family Dollar, had encouraged Family Dollar to sell itself to Dollar General.
On Monday, Icahn said he was "surprised" by Family Dollar's deal with Dollar Tree and questioned whether Levine's future role at Dollar Tree could have influenced the company to go ahead with the deal. Dollar Tree said last month Levine would remain as Family Dollar CEO after the acquisition.
Icahn has cut his stake in Family Dollar to 3.6 percent as of July 30.