Family Dollar rebuffs Dollar General's latest offer; Dollar Tree willing to shed more stores

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In this Aug. 19, 2014 photo, a customer carries out her purchases from a Family Dollar store in Jackson, Miss. Family Dollar on Friday, Sept. 5, 2014 rejected Dollar General's latest acquisition offer, and Dollar Tree says it will now divest as many stores as needed to get antitrust clearance for its deal to buy Family Dollar. (AP Photo/Rogelio V. Solis)


CHESAPEAKE, Virginia — Family Dollar is rejecting Dollar General's latest acquisition offer, and Dollar Tree says it will now divest as many stores as needed to get antitrust clearance for its deal to buy Family Dollar.

Family Dollar rejected an earlier offer of nearly $9 billion from Dollar General, with the Goodlettsville, Tennessee, discounter then boosting its bid to $9.1 billion. Dollar General — the nation's biggest dollar-store chain — had also revised its proposal to increase the number of stores it would be willing to divest and to include a $500 million reverse break-up fee to Family Dollar if the deal hit antitrust roadblocks.

But Family Dollar said Friday that it still has antitrust concerns. Dollar General said in a statement that it is still committed to acquiring Family Dollar and is evaluating its next steps.

Family Dollar has been looking for a lifeline after running into some financial stress, shuttering stores and cutting prices. In June one big shareholder, Carl Icahn, urged the Matthews, North Carolina-based company to put itself up for sale.

A month later Family Dollar Stores Inc. accepted an $8.5 billion deal with Chesapeake, Virginia-based Dollar Tree Inc. The transaction includes $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share held. The companies valued the transaction at $74.50 per share at the time. Including debt and other costs, Family Dollar and Dollar Tree estimated the deal to be worth approximately $9.2 billion.

The two companies said Friday that they anticipate the transaction closing as early as the end of November.

Dollar Tree's willingness to shed more stores comes three days after Dollar General Corp. said it would divest up to 1,500 stores to get a deal done. Dollar General originally agreed to shed 700 stores.

Dollar Tree CEO Bob Sasser said in a statement that he believes the company would be required to divest few, if any, of its stores because its business model is significantly different from Family Dollar's.

"Our product assortment and pricing is not driven by local competition, and we have very limited store overlap," he said.

The businesses of Family Dollar and Dollar General are more similar than Dollar Tree's. The first two sell items at a variety of prices while at Dollar Tree, all items are a buck.

Aside from agreeing to potentially divest more stores, all other terms of Dollar Tree's deal with Family Dollar are unchanged.

Family Dollar and Dollar Tree said that they expect the Federal Trade Commission to put forth a second request for additional information on their proposed transaction on Monday. The companies said that they are confident they will receive regulatory approval for the transaction.

Family Dollar's stock fell $1.06 to $79 in afternoon trading, while shares of Dollar Tree rose 42 cents to $55.44. Dollar General's stock declined $1.72, or 2.7 percent, to $62.76.

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