Family Dollar spurns Dollar General again

Fri Sep 5, 2014 2:01pm EDT
 
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By Siddharth Cavale

(Reuters) - Family Dollar Stores Inc rejected Dollar General Corp's sweetened takeover bid, saying the offer still did not address antitrust concerns, raising the prospect that the No. 1 U.S. deep discount chain will go "hostile" with its offer.

Dollar General raised its offer for Family Dollar Stores on Tuesday by 2 percent to $9.1 billion, or $80 per share, and said it was willing to sell up to 1,500 stores to clear any antitrust review.

Dollar General also offered to pay $500 million as break-up fee and warned it may take the offer directly to Family Dollar's shareholders if it was spurned again.

"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," Family Dollar Chief Executive Howard Levine said in a statement on Friday.

Family Dollar last month rebuffed Dollar General's initial all-cash offer on antitrust concerns and said it would stick with an $8.5 billion, or $74.50 per share, cash-and-stock offer from Dollar Tree Inc.

Dollar General said on Friday it would continue to pursue its smaller rival and was evaluating its next steps.

"While we are hard pressed at this point to predict the next chapter in this ongoing soap opera, we think Dollar General is likely to come back to the table with a revised proposal, which will probably contain its own "hell or highwater" provisions," BB&T Capital Markets analyst Anthony Chukumba wrote in a note.

Dollar General's shares were down 2.9 percent at $62.55, while Family Dollar was down 1.6 percent at $78.80 in afternoon trading.   Continued...

 
A Family Dollar store is seen in Chicago, June 25, 2012.  REUTERS/Jim Young/Files