Activist investor Mantle Ridge nominates $11 tree board

FILE PHOTO: Products are displayed at a Dollar Tree discount store in Garden City, New York, US, May 23, 2016. REUTERS / Shannon Stapleton

December 11, 2021

(Reuters) – Operational investment firm Mantle Ridge wants an overhaul of Dollar Tree’s board and wants the company to hire the former chief executive of rival Dollar General Corp. to push for a rethink of its business strategy Retailers.

Mantle Ridge, which owns a $1.8 billion stake in the retailer, nominated 11 people, including founder Paul Hilal, to Dollar Tree’s 11-member board, according to a regulatory filing. The resolution was issued late on Friday. The entire board of directors will be re-elected at next year’s annual meeting.

The company “would benefit from the renewal of its membership of the Board of Directors,” the filing said.

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

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

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

Mantle Ridge and its advisers met with Dollar Tree’s board of directors to discuss the investment company’s concerns about the company’s lagging share price and other issues, the filing said. know. Over the past five years, Dollar Tree’s share price has risen 68.11%, lagging rival Dollar General Corp’s 188.46% gain.

Although Mantle Ridge has said they want to continue talking to Dollar Tree, they are forced to nominate directors now as their discussions likely won’t be completed before the director nomination deadline 4 weeks ending at the end of this month.

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

Mantle Ridge has a 9.85% economic interest 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 acquired rival chain Family Dollar in 2015.

Dollar Tree traditionally sells items for one dollar, but last month said it would raise the price of most items to $1.25 by the end of April due to rising freight costs and other costs. other challenges posed by the pandemic.

The retailer faced another active investment firm in 2019 when Starboard Value urged the retailer to consider raising prices.

Mantle Ridge has traditionally only invested in one company at a time and has previously targeted railroad CSX Corp and food service company Aramark. Both companies appointed new executives shortly 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)