Activist investor Mantle Ridge nominates 11 to Dollar Tree board

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Mantle Ridge, which owns a $1.8 billion stake in the retailer, has nominated 11 people, including its founder Paul Hilal, to Dollar Tree’s 11-member board, according to a regulatory filing made late on Friday. The entire board is up for re-election at next year’s annual meeting.

The company “will benefit from a refresh of the membership of the Board,” the filing said.

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

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

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

Mantle Ridge and its advisors have met with Dollar Tree’s board to discuss the investment firm’s concerns about company’s lagging stock price and other issues, the filing said. Over the last five years Dollar Tree’s stock price has gained 68.11%, lagging rival Dollar General Corp’s 188.46% gain.

While Mantle Ridge said it wants to continue talking with Dollar Tree, it was forced to nominate directors now because its discussions likely will not be completed before the four week-long window to nominate directors closes later this month.

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

Mantle Ridge has an economic interest of 9.85% 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 bought a rival chain Family Dollar in 2015.

Dollar Tree traditionally sold items for one dollar but said last month that it would raise prices of most goods to $1.25 by the end of April in the wake of spiraling freight costs and other pandemic-driven challenges.

The retailer faced off against another activist investment firm in 2019 when Starboard Value urged the retailer to consider raising its prices.

Mantle Ridge traditionally makes an investment in only one company at a time and has previously targeted railroad CSX Corp (NASDAQ:CSX) and food service company Aramark. Both companies appointed new chief executives soon 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.