US investor Nelson Peltz has backed away from an aggressive takeover of Family Dollar Stores after a deal with the discount retailer.

Peltz, who had tried to buy the company through his Trian Group hedge fund, has agreed to not seek "economic ownership" of more than 9.9% of Family Dollar stock for a specified period of time.

In return, Edward Garden, the chief investment officer of Trian, will get a place on the discount retailers' board, as detailed in a regulatory filing last week.

The filing said Trian would "work constructively with [Family Dollar's] management and the board to identify and pursue strategies to enhance shareholder value".

In March, Family Dollar's board unanimously rejected a takeover approach from Trian, claiming it "substantially" undervalued the company.