Starboard takes stake in Dollar Tree, seeks sale of Family Dollar

(Reuters) - Activist investor Starboard Value LP said it had acquired a 1.7 percent stake in discount store operator Dollar Tree Inc and urged it to explore a sale of its underperforming Family Dollar business.

The investor also said it was seeking to replace seven directors on the retailer's 12-member board, as it took a stake valued at about $370 million in the company.

"We believe Dollar Tree should explore all strategic alternatives for Family Dollar, including a sale of

the business," Starboard's Chief Executive Officer Jeffrey Smith said in a letter addressed to the company's board.

Dollar Tree, which sells products at $1.00, has been struggling to turn around its Family Dollar business that it acquired in 2015 for about $8.5 billion.

The sale of Family Dollar would likely fetch less than the price Dollar Tree paid for the business, Starboard said.

The activist investor also urged the company to explore and implement a multiple-pricing strategy that would be above just $1.00.

The retailer did not immediately respond to a request for comment.

(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Shinjini Ganguli)