Dollar General sweetens
Family Dollar bid, may go hostile
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[September 02, 2014] By
(Reuters) - Dollar General
Corp raised its bid for Family Dollar Stores Inc to $80
per share, or $9.1 billion, and warned it may turn
hostile and appeal directly to shareholders if the new
offer was rejected.
The No.1 U.S. deep-discount retailer also said it would pay a
break-up fee of $500 million if the deal ran foul of competition
law, the reason Family Dollar had cited for its rejection of the
earlier $8.95 billion offer.
Family Dollar opted instead for an $8.5 billion cash-and-stock bid
from Dollar Tree Inc.
Family Dollar's shares were up almost 1 percent at $80.52 in
premarket trading on Tuesday, above Dollar General's offer,
suggesting some investors held hopes of higher offers.
Shares of Dollar General, which increased its all-cash offer by 2
percent, were up 2.3 percent.
"In the event you refuse to engage with us regarding our revised
proposal, we will consider taking our persuasive and superior
proposal directly to your shareholders," Dollar General Chief
Executive Rick Dreiling said in a letter to Family Dollar's board on
Dollar General also said it was willing to sell up to 1,500 stores
to clear the antitrust review, up from the 700 it had proposed
The company said it hired Richard Feinstein, a former director of
the Bureau of Competition at the Federal Trade Commission, to
further "validate its antitrust analysis".
Playing down antitrust concerns, Dollar General said its documents
would show that the products it offers are not unique as they are
also available at most mass retailers, drug and grocery stores.
It also said that Wal-Mart Stores Inc, and not Family Dollar, was
the primary driver for the company's pricing decisions.
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Dollar General and Family Dollar offer goods at multiple price
points, while Dollar Tree sticks to a $1 or less format.
The Dollar Tree bid is friendlier to Family Dollar's management.
Chief Executive Howard Levine, son of Family Dollar's founder, would
remain CEO of the Matthews, North Carolina-based company were it to
be bought by Dollar Tree.
If Dollar General succeeds in buying Family Dollar, Levine is widely
expected to lose his job, although this has not been confirmed.
Family Dollar was not immediately available for comment.
(Additional reporting by Abhirup Roy; Editing by Saumyadeb
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