Discount retailer Family Dollar Stores rejects Dollar General tender offer

17 September 2014 (Last Updated September 17th, 2014 18:30)

Discount retailer Family Dollar Stores announced that its shareholders have rejected the $9.1bn unsolicited conditional tender offer made by Dollar General.

Discount retailer Family Dollar Stores announced that its shareholders have rejected the $9.1bn unsolicited conditional tender offer made by Dollar General.

In conjunction with its rejection of Dollar General’s offer, Family Dollar’s board unanimously reaffirmed its recommendation in support of the deal with Dollar Tree.

"The offer may be designed to cause the stockholders of Family Dollar to refrain from approving the Dollar-Tree merger and harm Family Dollar’s business, rather than to result in a successful acquisition of Family Dollar by Dollar General," Family Dollar said in the filing.

Family Dollar is concerned that if it goes ahead with Dollar General’s deal as written, it could be at risk due to antitrust concerns.

In July, Dollar Tree has agreed to acquire Matthews, North Carolina-based Family Dollar for $74.50 per share in a cash and stock deal valued at $9.2bn. On 18 August, Dollar General made a superior all-cash proposal of $78.50 per share or $9.7bn to thwart the Dollar Tree bid.

In August, Family Dollar said its board unanimously rejected the non-binding proposal made by Dollar General on the basis of antitrust regulatory considerations. Family Dollar’s board unanimously reaffirmed its recommendation in support of the merger agreement with Dollar Tree.

Following this, Dollar General sweetened its offer by $1.50 to $80.00 per share, and also raised the number of stores it was willing to divest if ordered by the Federal Trade Commission or FTC.

Family Dollar chairman and CEO Howard Levine said, "Our Board of Directors, with the assistance of outside advisors and consultants, reviewed all aspects of Dollar General’s tender offer and concluded unanimously that this highly conditional Offer is illusory because, as Dollar General is well aware, the Offer cannot close on the terms proposed. Tenders into the Dollar General Offer will be meaningless since there is no way that Dollar General can purchase shares that are tendered."

Family Dollar director and co-founder Ed Garden said Dollar General has repeatedly stated that antitrust is not a risk, yet they have put forth proposals that require Family Dollar shareholders to bear the ultimate risk.