UPDATE 2-Family Dollar adopts poison pill after Icahn sparks sales talk

(Adds analysts' comments, market values, store counts; updates shares)

June 9 (Reuters) - Family Dollar Stores Inc adopted a poison pill to buy time to consider any possible deal that activist investor Carl Icahn could push for after becoming its largest shareholder.

Icahn reported on Friday a 9.39 percent stake in Family Dollar and said he was considering to push the $6.89 billion company for a merger with rival Dollar General Corp.

Family Dollar said on Monday the one-year shareholder rights plan, with a trigger of 10 percent, is not designed to prevent an offer to acquire the company but to allow it "adequate time to consider any and all alternatives."

Shareholder rights plan, commonly known as poison pill, protects against any one person or group from gaining control of the company without paying a premium.

Family Dollar's shares rose as much as 16 percent to $70.30 on the New York Stock Exchange on Monday, while Dollar General's shares rose as much as 14 percent to $65.97.

Jefferies & Co raised its rating on Family Dollar and Dollar General's shares to "buy", based on a potential combination of the companies and synergies of as much as $1.2 billion.

A deal could give Dollar General access to 8,100 stores Family Dollar operated as of April 10.

Dollar General had 11,338 stores as of May 2 mainly in eastern United States, where most of Family Dollar stores are also located.

"We think Dollar General could be a motivated buyer given where we are in the lifecycle of this dollar store industry and potential increased competition in small formats coming from Wal-Mart," Jefferies analyst Daniel Binder wrote in a note.

Dollar General, which has a market value of $17.59 billion, has been struggling to shore up margins after it slashed prices to keep its lower-income shopper base from being lured by Wal-Mart Stores Inc and Target Corp.

Family Dollar, struggling with declining sales, said in April it would close 370 stores, slow its expansion of new stores and slash prices to attract customers.

"Sector consolidation makes sense but management teams have so far resisted," Deutsche Bank analysts said.

Sterne Agee & Leach analysts ruled out a deal with Dollar General. "Dollar General took a hard look at Family Dollar in 2013 and passed on the acquisition. Since that time ... the company has gone out of its way to suggest to the Street purchasing Family Dollar is not part of its strategic focus in the near term".

They said fixing Family Dollar might be done better by taking it private.

Raymond James analyst Dan Wewer also said Dollar General CEO Rick Dreiling prefers organic growth over acquisitions and that Family Dollar would be an expensive buy.

The company trades at 17.8 times earnings, compared with Dollar General's 15.6 times and industry median of 15.1 times, according to Thomson Reuters StarMine.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Don Sebastian)