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Family Dollar Stores Inc. has rejected Dollar General Corp.'s revised $9.1 billion takeover bid, once again citing concerns over antirust regulations.
Dollar General's most recent bid of $80 per share followed the Goodlettsville, Tenn.-based discounter's prior bid of $78.50 per share made on Aug. 18., which Family Dollar rebuffed citing concerns over merging the nation's two largest small-store discount retailers. The deal would have created a 20,000-store chain spanning 46 states.
The latest offer also includes the divesture of 1,500 stores -- more than doubling the 700 store count offered in the prior bid -- which Dollar General CEO Rick Dreiling said "provided more than sufficient cushion to clear any FTC review."
Howard R. Levine, Family Dollar chairman and CEO, said the company's board of directors identified a "very real and material risk that the transaction proposed by Dollar General would fail to close, after a lengthy and disruptive review process." Levine added that Family Dollar has reaffirmed its $8.5 billion deal with Dollar Tree with a "hell or high water" provision, which states that Dollar Tree will divest as many stores as necessary to secure regulatory approval. The merger with Dollar Tree could be completed as early as November.
Some analysts believe Family Dollar's continued refusal of Dollar General's offers could incite a hostile takeover, in which Dollar General would take its proposal directly to Family Dollar shareholders.
"The fact that the Dollar Tree deal has the backing of a key board member – one with ties to the activist investor who has criticized Family Dollar’s performance of late – may cause Dollar General some second thoughts about going directly to the shareholders," said Planet Retail Director Kelly Tackett. "At this point, though, I don’t think Dreiling and Dollar General are going to down without a fight. The outcome is likely to rest on just how risk-averse Family Dollar shareholders are."
In response to the rejection of its latest offer, Dollar General stated that it "remains committed to acquiring Family Dollar and is currently evaluating its next steps."