MATTHEWS, N.C. — The directors of Family Dollar Stores Inc. continue to back Dollar Tree Stores Inc.’s bid to acquire their company, despite Dollar General Corp.’s higher offer.
Dollar General has made a hostile bid for its dollar store rival. It has offered $80 per share, or $9.1 billion. That compares to Dollar Tree’s acquisition offer of $74.50 per share, or about $8.5 billion.
Family Dollar chairman and chief executive officer Howard Levine has called Dollar General’s all-cash tender offer “illusory,” saying that the proposed deal was unlikely to be approved by the Federal Trade Commission.
Family Dollar said that 6,000 of its 8,200 stores are within three miles of a Dollar General store, and more than 1,500 of those stores face no competition from a nearby Walmart.
“The FTC is likely to take the position that Family Dollar’s pricing model would immediately lead to higher prices in thousands of locations if Dollar General was no longer an independent competitor,” Family Dollar said in a statement. By contrast, “the Dollar Tree merger has a very high likelihood of receiving clearance,” the company said.
Dollar Tree, the smallest of the three companies, has pledged to close or sell as many stores as regulators require in order to close the deal with Family Dollar. Dollar General, meanwhile, has offered to sell or close up to 1,500 stores to make its own acquisition of Family Dollar more amenable to regulators.
“Dollar General has invested significant time and resources in pursuit of this acquisition and remains committed to its successful completion,” said chairman and CEO Rick Dreiling. “Rather than engaging with us in a meaningful and constructive manner, the Family Dollar board has continued its efforts to distract shareholders from the main issue at hand — that a superior proposal adequately addressing antitrust issues remains on the table. Through our tender offer, Dollar General has provided all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer.”
Dollar General’s offer runs through October 8.
Family Dollar’s two biggest shareholders — Levine and New York investment firm Trian Fund Management LP, which collectively own about one-sixth of the outstanding shares — are supporting the Dollar Tree deal, which still has to be approved by Family Dollar shareholders. Levine has warned that the antitrust review of Dollar General’s bid could drag on for months before the deal ultimately fails to close.