Topic: How To Invest

Spinoffs, Takeovers and Special Situations Hotline – Friday, October 26, 2018

Article Excerpt

DOLLAR TREE INC., $83.28, symbol DLTR on Nasdaq, is North American’s largest operator of dollar stores, with 15,073 locations in 48 U.S. states and Canada. Stores operate under the Dollar Tree, Family Dollar, and Dollar Tree Canada banners. Billionaire activist Carl Icahn now reportedly holds a “significant stake” in Dollar Tree. In 2014, Icahn built a 9.4% holding in Family Dollar, and then pushed that company to sell itself in 2015. Dollar Tree ended up paying $8.5 billion for Family Dollar, and Icahn made a big profit. However, in making the acquisition, Dollar Tree took on a lot of debt—its long-term debt now stands at $5.0 billion. While that’s a manageable 25% of its market cap, the interest it pays on the debt makes it harder for the company to invest in improving and upgrading its stores. Dollar Tree is profitable with rising sales. But the company could undertake a number of measures to boost those returns. The most obvious move for Dollar Tree is to…