By Phil Wahba
June 27, 2014

Dollar General (DG) CEO Rick Dreiling threw a big wrench into Carl Icahn’s plans to find a buyer for struggling discount chain Family Dollar Stores: (FDO) when he unexpectedly announced his retirement.

Dreiling, who became CEO in January 2008 and took it public the following year, said on Friday he would retire as CEO on May 30, 2015, or earlier if Dollar General finds a new CEO before then. On his watch, the discount chain’s annual sales rose more than 80% to $17.5 billion last year, aided by a big store expansion he had overseen, easily outperforming rival Family Dollar.

Family Dollar’s chronic problems has long made it a magnet for activist investors, most recently Icahn: earlier this month, he announced a 9.4% stake in Family Dollar and started to agitate for a sale of the company, even raising the specter of a proxy war if he doesn’t get his way.

In a letter last week to Family Dollar CEO Howard Levine, Icahn spoke of “massive synergies” if a rival bought Family Dollar—he didn’t mention Dollar General by name, but that’s the potential buyer the market took him to mean.

But with Dreiling leaving, the odds of that happening have apparently diminished, judging by the declines in both companies’ shares on Friday.

“There is no way he or she [Dollar General’s future CEO] is going, at least early on, to bet their entire career on a large, transformative acquisition of a perennially underperforming retailer,” said Anthony Chukumba, an analyst with BB&T Capital Markets. “It’s completely off the table.”

Better luck next time, Mr. Icahn.

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