Shares of Dollar Tree Inc (NASDAQ: DLTR) opened more than 2.0% down on Monday after Mantle Ridge said it wanted to replace all eleven members of the board at the discount store company.
Mantle Ridge wants Richard Dreiling as executive chairman
The activist investor also wants Dollar Tree to hire Richard Dreiling as its executive chairman. Dreiling has previously served as the chief executive at rival Dollar General Corp. Mantle Ridge has a 5.7% stake in Dollar Tree.
The retailer on Monday said it was open to giving a board seat to Dreiling but “handling control of the company” to the activist investor will be “value destructive” for Dollar Tree and its stakeholders.
It also agreed on letting Mantle Ridge nominate another member to the board. Last month, UBS raised its price target on DLTR to $155 that represents another 10% upside from here.
Cramer’s remarks on CNBC’s ‘Squawk on the Street’
On CNBC’s “Squawk on the Street”, Jim Cramer said it made no sense that Mantle Ridge would seek to replace the entire board at Dollar Tree as he rated the stock at “buy”.
Can we go after something that’s not up for the year? Dollar Tree is a buy. It’s trying very hard; bought Family Dollars. They’re doing everything they can and, in an environment where 50% of people aren’t really benefitting from this fantastic market, Dollar Tree remains indispensable.
He also confirmed that Dollar Tree was facing supply constraints and could see further upside once it’s resolved. Last month, the discount store company also blamed freight costs as it gave dovish guidance for the holiday quarter.
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