The Morning Brief: Dollar Tree to Buy Family Dollar as Activists Smile
Call this another win for the activists. Shares of Family Dollar surged about 25 percent to close at $75.74 after Dollar Tree announced Monday that it will acquire the discount retailing rival for $74.50 per share in cash and stock, a 22.8 percent premium over Family Dollar’s closing price on Friday. The biggest winners: Carl Icahn, who on June 6 disclosed he owns 9.4 percent of the discount retail chain; Nelson Peltz’s Trian Fund Management, with 7.35 percent of the shares; and John Paulson’s Paulson & Co., which owns 5.68 percent of the stock. In June, Icahn called on the company to “immediately” put itself up for sale. “We believe there would be significant interest from strategic and financial buyers who could recognize massive synergies from an acquisition of the company,” Icahn said in a letter to the company at the time.
Peter A. Jenson, the former chief operating officer at Harbinger Capital Partners has agreed to settle Securities and Exchange Commission charges for participating with the hedge fund firm and its owner, Philip Falcone, in a scheme to illegally use millions of dollars from the fund to help pay Falcone’s personal taxes. Jensen, who agreed to admit wrongdoing, will pay a $200,000 penalty and be banned from the securities industry for at least two years. He also agreed to be suspended from working as an accountant on behalf of a publicly traded company for the next two years. Last year, Falcone and Harbinger also settled with the SEC and agreed to pay more than $18 million and admit wrongdoing in the case. “This settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them,” says Julie M. Riewe, co-chief of the SEC Enforcement Division’s asset management unit, in a press release.
Former SAC Capital Advisors owner Steve Cohen was one of the big winners when real-estate website Zillow announced Monday that it agreed to acquire Trulia. for $3.5 billion in an all-stock deal. In May, Point72, Cohen’s family office, disclosed that it owns 2.2 million shares, or 6 percent of Trulia, an online residential real estate site. At the end of the first quarter, Tiger Global Management reported owning 4.64 percent of the stock. Shares of Trulia Monday surged more than 15 percent to close at $65.04.
Anil Prasad, a former global head of foreign exchange at Citigroup, is planning to launch a new global macro hedge fund early next year, according to Reuters. Farhang Mehregani, the former chief investment officer of Sciens Alternative Investments, is also joining the firm as a partner at the firm, which will operate from both New York and London.
When most people think of William Ackman’s Pershing Square Capital Management, they think of his huge negative bet against Herbalife or his tag-team hostile takeover offer for Allergan with Valeant Pharmaceuticals. However, when the fund posted a 12.9 percent gain in the second quarter and 25 percent gain for the first half, one of its best-performing stocks was an often overlooked holding. Platform Specialty Products, a producer of chemical products, rose 47.1 percent during the most recent quarter, according to an investor. “Pershing believes the market is beginning to appreciate the attractiveness of Platform’s long-term, acquisition-based strategy but that substantial upside remains,” states a report from a fund of funds with an investment in Pershing Square.