Dollar General digs in as Family Dollar rebuffs takeover bid

New York -- Citing antitrust concerns, Family Dollar Stores on Thursday firmly rejected a takeover offer by larger competitor Dollar General, and said it favors a smaller deal with potential buyer Dollar Tree. Following an $8.5 billion offer last week by Dollar Tree, Dollar General offered a $9 billion, all-cash deal.

"Our board reviewed, with our advisers, all aspects of Dollar General's proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed," said Family Dollar chairman and CEO Howard R. Levine. "Accordingly, our board rejects Dollar General's proposal and reaffirms its support for the pending merger with Dollar Tree."

Dollar General was quick to respond to the rebuff, and said it was confident it could quickly and effectively address any potential antitrust issue that the takeover could arise in the wake of the acquisition.

“We have done extensive antitrust analysis using experienced advisers, the results of which confirm that the transaction as proposed is capable of being completed,” stated Rick Dreiling, Dollar General’s chairman and CEO. “We remain willing to share this analysis with Family Dollar and its counsel and are confident that we will be able to quickly and efficiently resolve any potential antitrust issues.

There has been much speculation over the myriad of reasons why Family Dollar would prefer to sell itself to Dollar Tree over Dollar General. One major factor is store closures; a takeover by Dollar General could result in far more closures as there are more territory overlaps between the two. Dollar General had said it would divest 700 stores after a potential merger with Family Dollar to satisfy regulatory concerns.

Antitrust issues were also raised by multiple analysts. And, on Thursday, reports surfaced that there were more underlying currents between Family Dollar and Dollar General than had been originally reported. Dollar General CEO Richard Dreiling said that Family Dollar had expressed interested on multiple occasions that they were interested in pursuing a transaction; Dollar General says that is not the case.

Also, Dreiling said his company was unaware that Family Dollar was engaging in conversations with Dollar Tree, suggesting that Levine has harbored concerns that he would lose his CEO position if a deal with Dollar General.

 

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