ISS reverses stance, backs Dollar Tree's bid for Family Dollar

Wed Jan 14, 2015 1:10pm EST
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By Ramkumar Iyer and Sruthi Ramakrishnan

(Reuters) - Institutional Shareholder Services advised Family Dollar Stores Inc FDO.N shareholders to vote for the retailer's acquisition by Dollar Tree Inc (DLTR.O: Quote), reversing its previous stance.

The deal offers near certainty of closure, the proxy advisory firm said in a report.

ISS asked Family Dollar's shareholders in December to oppose Dollar Tree's $8.5 billion cash-and-stock offer, delay voting on the deal and consider Dollar General Corp's (DG.N: Quote) higher cash offer of $9.1 billion.

"Dollar General's near-silence on regulatory progress - particularly its failure to meaningfully follow through on its own unforced commitment to provide a meaningful update in December - speaks volumes," ISS said on Wednesday.

Dollar General, the largest U.S. discount retailer, has not provided any major updates on its talks with antitrust regulators after Family Dollar's shareholder meeting to vote on the deal was postponed for the second time on Dec. 23.

"This is the time where they (Dollar General) have to show their cards ... or else Dollar Tree will indeed win the prize," Rahul Sharma, managing director of investment advisory firm Neev Capital, told Reuters.

Further adjournments risked Dollar Tree walking away and there were no "material improvements" in the chances of Dollar General's bid getting antitrust approval, ISS said.

Dollar Tree said in a letter to Family Dollar last week that it was unwilling to agree to further adjournments of the shareholder vote, which is now scheduled for Jan. 22.   Continued...

A view of the sign outside the Dollar Tree store in Westminster, Colorado, February 26, 2014.   REUTERS/Rick Wilking