Family Dollar rejected a takeover bid from Dollar General, saying it would be too hard for the deal to pass antitrust regulators. Family Dollar’s board said it supports its existing deal to be acquired by Dollar Tree, which previously made a bid.
Family Dollar Chairman/CEO Howard Levine said in a statement today that its board and advisers reviewed Dollar General Corp.’s offer and determined it wasn’t reasonably likely to be completed on the terms proposed.
Meanwhile Dollar General’s Chairman/Rick Dreiling said in his statement that his company was disappointed in Family Dollar’s decision, and that it had done an extensive antitrust analysis that confirmed its proposal could be completed. Dollar General said it was willing to share its analysis with Family Dollar and that it was still confident it could resolve any regulatory concerns about competition.
‘Watching Developments Closely’
Dollar General said is reviewing its options and still believes its offer is better than the Dollar Tree deal.
Family Dollar has been seen as a takeover target due to its struggles, such as shuttering stores and cutting prices to help boost its finances. In June investor Carl Icahn urged the company to put itself up for sale.
On Monday Dollar General — the nation’s biggest dollar-store chain—offered about $8.95 billion, or $78.50 a share in cash, for Family Dollar.
Last month Family Dollar agreed to an $8.5 billion deal with Dollar Tree Inc. The transaction includes $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share held. The companies valued the transaction at $74.50 per share at the time. Including debt and other costs, Family Dollar and Dollar Tree estimated the deal to be worth approximately $9.2 billion.
An acquisition would be an advantage to any of the dollar stores, which has taken share from mass merchants, such as Walmart and Target, and maintained relative strength in their financial performances.
A combination of Dollar General and Family Dollar would have about 20,000 stores in 46 states, with sales of more than $28 billion, Dollar General has said.
Dollar Tree is No. 3 in the market. Its CEO Bob Sasser, reiterated his commitment to the deal on today’s earnings call and said his company would be watching the developments closely.