By Dhirendra Tripathi
Investing.com – Dollar Tree stock (NASDAQ:DLTR) traded 1.2% lower Monday after the company’s battle with activist investor Mantle Ridge became public Sunday, suggesting the distraction may last for a while.
The discount retailer proposed settlement talks with Mantle Ridge, calling the activist's move "unwarrantedly aggressive" and offering to hand a board seat to rival Dollar General's (NYSE:DG) former chief executive Richard Dreiling, as desired by the investor.
". . .We strongly believe that the breadth and depth of the changes you suggest would be very disruptive and value destructive," Dollar Tree wrote in a letter to Mantle Ridge’s Paul Hilal on December 7. Hilal rose into prominence as an activist investor at William Ackman's Pershing Square (NYSE:SQ) Capital Management.
On Friday, Mantle Ridge nominated 11 directors to the company’s board while pushing it to hire Dreiling.
Dollar Tree’s market cap is up by around $7 billion since Mantle Ridge’s 5.7% stake became known around a month back. The Wall Street Journal first reported on the stake on Nov. 11.
The discount chain's margins have been under pressure as inflation took root, challenging its core model of stocking and selling most products under $1. It has had to shift more products to selling above that price.