(Bloomberg) — Dollar Tree Inc. struck back Sunday at the activist investor seeking to replace its entire board, contending Mantle Ridge has brought no new ideas to the table and refused to engage constructively with the company.
The board said it was “disappointed” that Mantle Ridge chose to proceed in “an unwarrantedly aggressive and hostile manner,” according to a statement. Dollar Tree said it met with representatives from the firm on Dec. 2 to hear their ideas, and heard few other than demands that it should appoint former Dollar General Corp. Chairman Richard Dreiling as executive chairman.
Dollar Tree’s board also said it had offered a settlement in which Dreiling would be appointed to the board, and would’ve given the activist firm a role in the ongoing refreshing of directors. The discounter said it didn’t hear back from the firm before it nominated 11 directors to replace its entire board last week.
“The only operational suggestion made – that the company should sell Dollar Tree merchandise at Family Dollar stores – is something Dollar Tree has already been doing for several years,” according to the statement.
Mantle Ridge, which owns a 5.7% stake in Dollar Tree, said late Friday in a regulatory filing it was seeking to replace all 11 directors and a leadership role for Dreiling.
Dollar Tree’s shares have risen 31% since Bloomberg News reported Nov. 4 that Mantle Ridge was speaking to investors about building a stake in the company. The shares rose 2.3% to $141.55 in New York trading Friday, giving the company a market value of $32 billion.
Tracing its roots to a variety store started in the 1950s, Chesapeake, Virginia-based Dollar Tree pioneered the concept of selling everything from toothpaste to toys for $1. The parent of Dollar Tree and Family Dollar stores has begun moving away from that model as inflation, supply-chain constraints and shifting consumer tastes have hurt its bottom line.
Last month, the company said it will raise its prices so that the standard price point for its products will be $1.25 by April. The company noted that its share price has responded favorably to the move.
“This was not a decision the company took lightly, and required careful planning, including to ensure that it continues to provide a meaningful assortment with extreme value to its customers,” the company said Sunday in its statement.
“Operational performance at converted Dollar Tree stores continues to validate our earlier tests and demonstrates the success of the Company’s strategy and execution,” it said.
Dollar Tree also said its directors had the necessary experience and that Mantle Ridge “hand-picked nominees are drawn from boards of companies at which Mantle Ridge is highly influential, if not in total control, hardly a model of good corporate governance.”
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