Billionaire investor Nelson Peltz's Trian Capital offered to take Family Dollar private for between $55 and $60 in cash, valuing the company at as much as $7.6 billion, according to a regulatory filing.
Trian, a hedge fund that already owns about eight percent of Family Dollar, contracted the discount retailer's CEO, Howard Levine, about the offer and offered him the opportunity to participate in the buyout. Levine owns slightly more shares than Trian.
Trian's bid represents at least a 25 percent premium to Family Dollar's closing price of $43.96 on the New York Stock Exchange on Tuesday.
News of the offer came after the market closed. Family Dollar shot up in after-hours trading. Click here for after-hours quote.
Family Dollar had 126.4 million shares outstanding as of December 27, 2010, which would imply a deal of $7.6 billion at $60 per share.
Family Dollar has lagged behind its main competitor in the dollar store space, Dollar General in sales per square foot and new store openings.
Trian, which has a history of activism in consumer companies such as Heinz , Cadbury and Kraft, has also been a large shareholder in retailer Tiffany—at the other side of the retail world from Family Dollar.
The firm gets a lot of attention for its activism though it's not clear what its actual performance has been on its various investments.
In a separate regulatory filing, Trian Capital loaded up on shares of cereal maker Kellogg , while at the same the fund exited a number of financial services companies.
The activist investor, who agitated several years ago for the merger between fast-food restaurant chains Wendy's and Arby's, snapped up some 2.8 million shares of Kellogg in the past quarter.
Meanwhile, Wendy's/Arby's Group remains one of his biggest positions.
Like many hedge fund managers betting on an economic recovery, Peltz last year owned a number of bank stocks, like Bank of America and JP Morgan Chase. But by the end of last year, the activist investor no longer held his once-substantial positions in those stocks.
—Reuters contributed to this report.