The board of US discount retailer Family Dollar Stores has unanimously rejected a takeover approach from Trian Group, the fund run by activist US investor Nelson Peltz.

In an announcement today (3 March) Family Dollar's board insisted that Trian's unsolicited takeover offer "substantially undervalues" the company and suggested that a sale is not in the best interests of shareholders. Instead, the board concluded that the continued implementation of Family Dollar's "strategic plan" affords the best prospects for value creation.

"In September 2010, we shared with investors our strategic plan to accelerate revenue growth, expand operating margins and optimise our capital structure," said chairman and CEO Howard Levine. "The results from this fiscal year are a positive reflection of this plan."

Family Dollar has accelerated new store openings, launched a store renovation programme and invested to improve operational capabilities, Levine emphasised. Over the past year Family Dollar's quarterly dividend has risen by 16% to US$0.18 per share and the board has approved a $750m share repurchase programme, he added.

"Family Dollar is executing effectively on its business plan and has a proven record of delivering superior results for shareholders. We continue to believe that our efforts to serve our customers better while improving our operational capabilities and returning excess capital to shareholders will deliver strong financial returns in fiscal 2011 and beyond," Levine insisted.