Icahn Takes Position in Family Dollar (FDO)

Prominent investor Carl Icahn has taken a new 9.4% stake in Family Dollar Stores, Inc (FDO), and shares of the struggling discount retailer are surging.

Shares of Family, down nearly 7% in 2014, spiked as much as 12% to $68 in extended trading on Friday following disclosure of the stake.

In his securities filing, Icahn, known for taking big positions in companies, said he acquired 10.7 million FDO shares with an aggregate purchase price of $265.8 million “in the belief that they were undervalued”. He also said he plans to ask the company to explore strategic alternatives and possibly seek a seat on the board of directors.

In a statement late Friday, the discount chain said its board of directors was “open to dialogue with all shareholders and welcome input toward the shared goal of enhancing value.”

Family, whose second largest shareholder is Nelson Peltz’s Trian Fund Management LP possessing a 7.4% stake, said in April it would close 370 underperforming stores, or about 4.6% of its 8,100 locations, slow the pace of new store openings and permanently lower prices on about 1,000 basic items in an effort to win customers.

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