Dollar General Boosts Bid for Family Dollar

Janet S. Carter/AP
Dollar General (DG) upped its bid for the rival Family Dollar chain and addressed an earlier roadblock, saying that it will more than double the number of stores it would shed to tamp down the antitrust concerns of its takeover target.

The newest bid is worth $9.1 billion, or $80 a share, up from $78.50 a share in the previous offer.

Family Dollar (FDO), based in Matthews, North Carolina, rejected the earlier bid in favor of a lesser offer of $8.5 billion from Dollar Tree (DLTR), saying that regulators were less likely to stand in the way.

On Tuesday Dollar General, the country's largest dollar-store chain, said it would divest as many as 1,500 stores, well above the 700 that it had originally agreed to, in order to sidestep any anti-monopoly actions that regulators might pursue.

The Goodlettsville, Tennessee, company has also said it will pay a $500 million reverse break-up fee to Family Dollar Stores if the deal hits antitrust roadblocks.

Dollar General Chairman and CEO Rick Dreiling said that a second antitrust review supported its prior bid, but that its offer was revised "to demonstrate the seriousness of our commitment."

The businesses of Family Dollar and Dollar General are more similar than Dollar Tree's. The first two sell items at a variety of prices while at Dollar Tree, all items are a buck.

Family Dollar has been looking for a lifeline after running into some financial stress, shuttering stores and cutting prices. In June one big shareholder, Carl Icahn, urged the company to put itself up for sale.

Family Dollar acted one month later, accepting an offer from Chesapeake, Virginia-based Dollar Tree of $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 a share at the time. Including debt and other costs, Family Dollar and Dollar Tree estimated the deal to be worth approximately $9.2 billion.

Shares of Family Dollar added 54 cents to $80.37 in premarket trading, while Dollar General's stock gained 86 cents to $64.85.


Increase your money and finance knowledge from home

Socially Responsible Investing

Invest in companies with a conscience.

View Course »

Goal Setting

Want to succeed? Then you need goals!

View Course »

Add a Comment

*0 / 3000 Character Maximum

10 Comments

Filter by:
mlance49

No way are there going to be .50 Stores. Most products at Dollar Tree cost .50 lol

September 02 2014 at 1:19 PM Report abuse rate up rate down Reply
tlgentry

Dollar General is quickly becoming Walmart's competition. People tend to shop at smaller box stores like Dollar General and Family dollar. It makes perfect since to me that Dollar General wants to buy Family Dollar. Gives DG an upper edge over big box stores. People are fed up with Walmart. DG is a viable alternative. Easy to access, discounted products, Great prices, friendly employees...you don't need large box stores like Walmart. If you notice...Walmart is getting into smaller box stores. "Neighborhood store." Coincidence?

September 02 2014 at 11:48 AM Report abuse rate up rate down Reply
rbrtkyte

Don't do it Family Dollar ,I'd much rather see a Family Dollar than a Dollar Store !! Much more quality can be found at a Family Dollar as well

September 02 2014 at 11:38 AM Report abuse rate up rate down Reply
Tayeb

Bad days for minimum wage people like us. I can wait for new fifty cents stores ...

September 02 2014 at 11:18 AM Report abuse rate up rate down Reply
1 reply to Tayeb's comment
rbrtkyte

Not gonna happen in this lifetime ever again I'm Afraid

September 02 2014 at 11:39 AM Report abuse rate up rate down Reply
Rebel

Well you can bet that prices will go up now!

September 02 2014 at 10:00 AM Report abuse rate up rate down Reply
1 reply to Rebel's comment
rbrtkyte

Yeah ,Now it'll be the "Twodollah sto"

September 02 2014 at 11:40 AM Report abuse rate up rate down Reply
yellowberry3535

so, let me get this straight..........dollar tree wants family dollar that bad but yet has a simillar business( DEALS inc.) but dollar general wants family dollar so they can trim 1500 stores?? i don't get it.

September 02 2014 at 9:55 AM Report abuse rate up rate down Reply
1 reply to yellowberry3535's comment
lvhd1

i dont either ... ill wait to when the $.50 cent stores come out.

September 02 2014 at 11:01 AM Report abuse +1 rate up rate down Reply
1 reply to lvhd1's comment
rbrtkyte

NEVER GONNA HAPPEN MY FRIEND

September 02 2014 at 11:41 AM Report abuse +1 rate up rate down