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 The attorneys general concern focuses on the likelihood that the
loss of one of the chains would lead to higher prices for discount
store customers, many of whom are poor, said two sources who spoke
privately because they were not authorized to speak to reporters.
Family Dollar, the No. 2 U.S. discount retailer, had previously
disclosed that state attorneys general were involved in the federal
investigation but gave no details.
The 20 states looking at this deal are similar in number to those
looking at Comcast Corp’s <CMCSA.O> plan to buy Time Warner Cable
Inc <TWC.N> and Sysco Corp’s <SYY.N> bid for US Foods Inc
[USFOO.UL], both of which are high-profile deals.
Florida is a member of the multi-state group, which joined the
Federal Trade Commission to determine if the deals were legal under
antitrust law, according to Whitney Ray, spokesman for Attorney
General Pam Bondi.
Vermont has also joined, said Jill Abrams, an assistant attorney
general in the state. Iowa is also in the group, according to a
source who was not authorized to speak to reporters.
Indiana is looking into the mergers, but a spokesperson declined to
say if it had formally joined the group.
The presence of the state attorneys general gives the FTC additional
lawyers to look at the case, much-needed knowledge of how the
merging companies function in the state and how the deal would
affect a state’s consumers, said Allen Grunes, an antitrust attorney
with the Konkurrenz Group in Washington, DC.
"There are times where federal government wants to do one remedy and
you have a state or two who believe that there should be more done
in their state. They at times will negotiate additional
divestitures," said Grunes.
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Dollar Tree and Family Dollar declined comment. Dollar General has
previously said that it remained committed to the transaction and
would continue to work with the FTC.
Family Dollar, which has 8,100 discount stores in 46 states, has
been targeted for a takeover by both Dollar Tree, which has 5,282
stores in 48 states, and by Dollar General, which is the big dog in
discount retailing with 11,000 stores in 40 states.
Family Dollar reported a 47 percent drop in quarterly profit on
Thursday as margins fell due to higher discounting. Net income fell
to $41.4 million, or 36 cents per share, in the fiscal first quarter
ended Nov. 29, from $78 million, or 68 cents per share, a year
earlier.
Family Dollar agreed to be bought by smaller rival Dollar Tree for
$8.50 billion in cash and stock and rejected a hostile, $9.1 billion
offer from Dollar General because of antitrust concerns.
In December, Family Dollar shareholders voted by a wide margin to
put off a vote approving the Dollar Tree offer, indicating interest
in the higher offer despite its risk.
(Reporting by Diane Bartz; Editing by Leslie Adler)
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