August 18, 2014
Rick Dreiling, CEO of Dollar General, made the following statement today during a conference call following his proposal to acquire Family Dollar.
“I will be honest with you. We have expressed interest in a combination with Family Dollar multiple times over the last few years. Suffice it to say,for someone who was supposedly involved in a process, we were very surprised by Family Dollar’s announcement with Dollar Tree. Ideally, one step further, if I thought this asset was in play, I probably wouldn’t have asked — announced my retirement.”
I’m also surprised. Today’s actions prove once again (as Charlie Gasparino tweeted this morning), the relevance of activism. Even as cynical as I am about the dysfunction of so many boards, I find it hard to believe that, before agreeing to a $305 million breakup fee to Dollar Tree (which was obviously designed to chill other bidders), Family Dollar wouldn’t first be absolutely sure Dollar General wasn’t interested in bidding. Could the fact that Family Dollar’s CEO, Howard Levine, has a future role in a Dollar Tree/Family Dollar merger have anything to do with it? Dreiling stated that for several years he’s been trying to enter discussions with Family Dollar, and it seems obvious that, in a Dollar General/Family Dollar merger, Levine would not have any future role. How far will crony boards go (and get away with it legally) to protect the CEO at the expense of shareholders? At too many companies in America the hubris of the CEO, supported by a crony Board, costs shareholders billions of dollars, and worse, it costs our economy even more.