GOODLETTSVILLE, Tenn. — Dollar General Corp. has raised its bid to acquire Family Dollar Stores, sending its rival a new acquisition proposal valued at about $9.1 billion.
In making its new offer on Tuesday, Dollar General also said it would be willing to divest up to 1,500 stores — more than twice as many as in its earlier proposal — if required by the Federal Trade Commission to address antitrust concerns.
Under the new acquisition offer, Dollar General would pay Family Dollar shareholders $80 per share in cash for all outstanding shares, up from its previous offer of $78.50 per share, which had a total deal value of $8.95 billion.
Dollar General announced its bid to acquire Family Dollar on Aug. 18, just over a couple of weeks after Dollar Tree and Family Dollar unveiled a merger deal in which Dollar Tree would acquire Family Dollar for $8.5 billion, or $74.50 per share. Citing anticompetitive concerns, Family Dollar rejected Dollar General’s offer a few days later.
"Based on the extensive work and analysis performed by its experienced antitrust counsel and economist, Dollar General believes the 700-store divestiture commitment in its prior proposal provided more than sufficient cushion to clear any FTC review," Dollar General stated on Tuesday. "Nonetheless, to demonstrate its commitment to the proposed transaction and the value it brings to Family Dollar shareholders, and to provide the Family Dollar board with a proposal that indisputably permits it to engage with Dollar General under the terms of its existing merger agreement, Dollar General’s revised proposal states that it would be willing to agree to divest up to 1,500 stores, if ordered to do so. As further evidence of its confidence in its ability to obtain antitrust approvals, Dollar General also has agreed to pay a $500 million reverse break-up fee to Family Dollar in the event that the transaction is not completed for antitrust reasons."
On Tuesday, Family Dollar confirmed that it has received Dollar General’s revised proposal and that its board will review the offer.
"There is no question that our proposal is economically superior to the existing transaction with Dollar Tree," Dollar General chairman and chief executive officer Rick Dreiling said in a letter to Family Dollar’s board on Tuesday. "While we believe your antitrust analysis has led you to a misplaced initial conclusion regarding the number of divestitures that may be required, we believe that the foregoing enhanced proposal and commitments should sufficiently address any concerns that led you to reject our prior proposal."
Dreiling also indicated in a statement Tuesday that Dollar General would mull a hostile bid for Family Dollar.
"Our revised proposal provides Family Dollar shareholders with significantly increased value over the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares," he stated. "If the Family Dollar board fails to seize this opportunity to maximize value for its shareholders, we will consider taking our superior proposal directly to the Family Dollar shareholders."
