Family Dollar Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Family Dollar Stores (NYSE: FDO  ) soared more than 20% in intraday trading Wednesday after activist investor Nelson Peltz offered to purchase the discount retailer for $55 to $60 per share.

So what: The cash offer values Family Dollar at roughly $7.3 billion and represents a premium of at least 25% to its closing price on Tuesday. Naturally, the news has investors scouring the space for value today, with discounters Dollar General (NYSE: DG  ) , Dollar Tree (Nasdaq: DLTR  ) , and 99 Cents Only (NYSE: NDN  ) all up nicely.

Now what: There's little for Family Dollar shareholders to do now but lighten up on the position and celebrate. Given the big premium and the fact that Family Dollar CEO Howard Levine was also offered a piece of the action, analysts are calling the deal pretty much done. Of course, for the rest of us who weren't lucky enough to get in on today's buyout bonanza, the previously mentioned rivals might be good bets on the low-end consumer going forward.

Interested in more info on Family Dollar? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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