...NEW YORK (S&P Global Ratings) Jan. 7, 2019--S&P Global Ratings today said it believes that activist investor Starboard Value L.P.'s stake in Dollar Tree Inc. (###-/Stable/--) seems likely to heighten pressure on the retailer to make material shifts in its financial or business strategies in the coming year. This could include driving an eventual sale of its weak Family Dollar unit. The hedge fund is seeking majority control of Dollar Tree's board of directors and is voicing criticism about the $9 billion 2015 Family Dollar purchase. It is also urging Dollar Tree to broaden from its $1 price point to improve merchandise quality and selection. Starboard cites tariff pressures on sourcing costs and competition from other multi-price point dollar players as some reason to consider the shift. We upgraded Dollar Tree to investment grade last year given its focus on debt reduction over shareholder initiatives, and leverage remains in the mid-2x range that is in line with our expectations. Still,...
