Dollar General Takes $9.1B Bid to Family Dollar Shareholders

9/10/2014

Dollar General Corp. has taken its $9.1 billion bid directly to Family Dollar Stores' shareholders, in an $80-per-share tender offer. The hostile takeover attempt comes in the wake of Family Dollar twice rejecting Dollar General's attempt to buy the Charlotte-based discounter.

Dollar General reaffirmed that its offer is superior to that of the $74.50-per-share deal inked with Dollar Tree, providing Family Dollar shareholders an additional value of $640 million. Similar to its prior offer on Sept. 2, Dollar General is also willing to divest up to 1,500 stores and pay Family Dollar a $500 million reverse break-up fee. 

Family Dollar has maintained that its deal with Dollar Tree presents fewer antitrust issues per the FTC, and has rejected the two bids by Dollar General on those grounds.

“Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares,” said Dollar General Chairman and CEO Rick Dreiling. “By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer.”

Dreiling added that Dollar General can now "begin the antitrust review process and will have an opportunity to present our position directly to the FTC."

Shareholders to be 'far more receptive'

"As suspected, Dollar General thinks Family Dollar shareholders will be much more amenable to its offer than the company’s board," Planet Retail Director Kelly Tackett told Progressive Grocer. "In all likelihood, Family Dollar shareholders will be more receptive as Dollar General offers far more value than the existing Dollar Tree bid. I don’t expect Dollar Tree will come back with a counter-offer."

Tackett added that "while the issue with anti-trust authority looms, Dollar General also now has to consider the messy aftermath for Family Dollar management, employees and even customers that a hostile takeover could result in."

Dollar General operates more than 11,500 stores in 40 states.

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