Dollar Tree To Divest Whatever Stores Necessary For Antitrust Approval
By Christine Kern, contributing writer
Merger Agreement Amended While Family Dollar Rejects Latest Bid from Dollar General
The fight over Family Dollar intensified last week as the Matthews-based retailer rejected the latest unsolicited buyout bid from rival Dollar General and accelerated its planned merger with another company.
Family Dollar said its board of directors spurned Tennessee-based Dollar General’s latest buyout offer due to continued concerns over antitrust issues.
The announcement came just three days after Dollar General increased its offer for Family Dollar and added safeguards aimed at soothing Family Dollar’s concerns that the deal would run afoul of federal antitrust regulations.
The merger agreement between Dollar Tree and Family Dollar was amended to include a commitment by Dollar Tree to divest as many stores as necessary or advisable to obtain antitrust clearance for the previously announced cash and stock transaction.
All other terms and conditions of the merger agreement remain the same as announced on July 28, 2014. The two companies also said that their expectations for a closing date for the transaction have accelerated to as early as the end of November 2014.
News of the amended merger agreement coincided with Family Dollar’s rejection of Dollar General’s revised proposal made on Sept. 2 on the basis of antitrust regulatory considerations.
Under the new agreement, Dollar General increased its price this week to $80 a share in cash. Along with the sweetened bid, Dollar General said it would sell as many as 1,500 locations to placate regulators, up from 700 in its earlier offer. It also would pay Family Dollar $500 million if the deal failed to garner approval.
Dollar Tree and Family Dollar expect the Federal Trade Commission to issue a second request for additional information on Sept. 8, and said they are confident that regulatory approval will be obtained.
“Dollar Tree is committed to working hard to complete our acquisition of Family Dollar as quickly as possible. Our amended agreement is clearly superior to Dollar General’s revised proposal based on antitrust risk, deal certainty and time value of money,” said Bob Sasser, Dollar Tree’s CEO.
“Unlike Dollar General, we expect to be required to divest few, if any, stores because our business model is significantly different from Family Dollar’s model. Our product assortment and pricing is not driven by local competition, and we have very limited store overlap. As evidence of our confidence in and commitment to closing this transaction without delay, we are amending our merger agreement to provide for a commitment to divest as many stores as necessary to obtain antitrust clearance,” Sasser said.
“Dollar Tree and Family Dollar continue to have productive discussions with the FTC,” added Sasser, “and despite the anticipated second request from the FTC, we remain confident in our ability to complete our transaction with Family Dollar by as early as the end of November 2014 and deliver expeditiously the closing certainty and substantial value that this transaction provides to both companies’ shareholders, customers and employees. We will continue to work hard to complete our acquisition of Family Dollar as quickly as possible.”