Activist investor Mantle Ridge nominates 11 to Dollar Tree board
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[December 11, 2021] (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.
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Products are seen on display at a Dollar Tree discount store in
Garden City, New York, U.S., May 23, 2016. REUTERS/Shannon Stapleton
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)
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