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 The move could throw a wrench in Family Dollar's agreement to sell
itself to Dollar Tree Inc for a lower cash-and-stock deal of $8.5
billion, or 74.50 per share.
Dollar General said on Wednesday it had started a cash tender offer
to buy all shares of Family Dollar for $80 per share.
The sweetened offer was rejected last week, with Family Dollar
saying it did not address antitrust concerns.
The battle for Family Dollar underscores Dollar General's
desperation to increase scale as it tries to keep lower-income
shoppers from being lured by Wal-Mart Stores Inc and Target Corp .
Wal-Mart is doubling down on small-format stores, typically one
quarter the size of its supercenters, a move that could result in
increased competition for Dollar General.
Family Dollar was not immediately available for comment.
The company has raised concerns that the Federal Trade Commission
will challenge a deal with Dollar General as it can lead to higher
prices in areas where only the two chains are present.
Dollar General downplayed such concerns by committing to sell up to
1,500 stores and offering to pay $500 million as break-up fee if the
deal fails to clear antitrust reviews.
The company said on Wednesday it would stick to those terms.
"We now can begin the antitrust review process and will have an
opportunity to present our position directly to the FTC," Dollar
General Chief Executive Rick Dreiling said.
Family Dollar's shares were trading at $79 before the bell on
Wednesday, valuing the company at $8.97 billion.
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The company's CEO, Howard Levine, is the largest shareholder with an
8.17 percent stake as of Aug. 5. Any deal could fetch him between
$690 million and $750 million.
Nelson Peltz's Trian Fund Management L.P. had a 7.34 percent stake
in Family Dollar as of July 27, while John Paulson's Paulson & Co
Inc reported a 7.04 percent stake on June 30.
Dollar General's tender offer is scheduled to expire on Oct. 8
unless extended.
Reuters reported on Tuesday that Dollar General would go hostile
with its offer, citing people familiar with the matter.
Dollar General's shares closed at $63.42 on the New York Stock
Exchange on Tuesday.
(Reporting by Siddharth Cavale in Bangalore; Editing by Saumyadeb
Chakrabarty)
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