Starboard Backs Down From Proxy Battle at Dollar Tree

(Bloomberg) -- Starboard Value said it won’t continue pushing for board seats at Dollar Tree Inc. after the discount store chain said it would explore a new multi-price strategy.

The New York-based hedge fund, which has said it owns a 1.7 percent stake in Dollar Tree, called on the company in January to implement big changes, including spinning off it Family Dollar business. It also nominated seven directors to the company’s board.

Shares in the company have gained about 14 percent from before Starboard’s announcement, in part, because Dollar Tree said it was open to considering a multi-price strategy rather than simply charging $1 for its goods. The company, based in Chesapeake, Virginia, also appointed a new director.

“We are pleased that Dollar Tree has announced its intention to perform a significant test of multiple price points at Dollar Tree stores,” Starboard said in a statement Friday. “In addition, management appears to have conviction that its proposed turnaround plan at Family Dollar is finally gaining traction.”

Starboard said that it had decided to withdraw its nominations for the board.

“We believe there is a substantial opportunity for further value creation, and we look forward to a continued dialogue and monitoring of the company’s progress,” it said.

Constructive Engagement

Dollar Tree said in a statement that it welcomed Starboard’s announcement and appreciates its constructive engagement.

“Dollar Tree’s board and management team are committed to pursuing our announced plan to improve Family Dollar performance and to testing other ways to help deliver sustainable value-creation for shareholders while providing the best possible experience and value for our customers,” according to the statement.

It’s the second time in a week that Starboard has withdrawn from a proxy fight. Last Friday, the activist fund run by Jeff Smith said it would no longer pursue the breakup of Bristol-Myers Squibb Co.’s $74 billion takeover of Celgene Corp. after two prominent shareholder advisory firms came out in support of the transaction.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Josh Friedman

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