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Family Dollar rejects upped bid from Dollar General; sticking with Dollar Tree

BY Marianne Wilson

Matthews, N.C. — Family Dollar Stores on Friday rejected the sweetened, $9.1 billion take-over bid made by Dollar General on Sept. 2, saying in a statement that its board voted unanimously to reject the revised offer "on the basis of antitrust regulatory considerations." It is the second time the company has used antitrust concerns to turn down an offer from Dollar General. Family Dollar said it would stick with an $8.5 billion cash-and-stock offer from Dollar Tree Inc.

"There is a very real and material risk that the transaction proposed by Dollar General would fail to close, after a lengthy and disruptive review process," stated Howard Levine, chairman and CEO of Family Dollar. "Accordingly, our board has rejected Dollar General’s revised proposal and reaffirmed its support of the transaction with Dollar Tree, which delivers attractive value in the form of immediate upfront cash and upside participation in a combined Dollar Tree-Family Dollar entity, as well as closing certainty.”

Dollar General increased its bid for Family Dollar this week to $80 a share in cash, compared with an offer of $78.50 two weeks ago. Dollar General also said it would sell as many as 1,500 stores to satisfy antitrust regulators, up from 700 in its previous approach. It also offered to pay Family Dollar $500 million if the deal failed to garner approval.

“We are focused on delivering to Family Dollar shareholders the highest value with certainty, and the Dollar Tree transaction does just that. Dollar Tree has taken the antitrust risk off the table by committing to divest as many stores as necessary to obtain antitrust clearance. We remain fully committed to the Dollar Tree transaction,” said Ed Garen, a Family Dollar director and co-founder and chief investment officer at Trian Fund Management. “Dollar General’s revised proposal, on the other hand, does not eliminate regulatory risk for Family Dollar shareholders. Dollar General has repeatedly stated that antitrust is not a risk, yet they have put forth proposals that require Family Dollar shareholders to bear the ultimate risk. Receiving a reverse breakup fee with an after-tax value of less than $3 a share does virtually nothing to compensate the Family Dollar shareholders for assuming that risk.”

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