Table of Contents
MATTHEWS, N.C. — Family Dollar Stores Inc. on December 23 postponed a shareholder vote on whether to accept the proposed sale of the company to Dollar Tree Inc., a delay that gives shareholders at least another 30 days to see how federal antitrust regulators assess a competing bid from Dollar General Corp.
Family Dollar Stores Inc. on December 23 postponed a shareholder vote on whether to accept the proposed sale of the company to Dollar Tree Inc., a delay that gives shareholders at least another 30 days to see how federal antitrust regulators assess a competing bid from Dollar General Corp.
It was the second time Family Dollar postponed a shareholder vote on Dollar Tree’s cash and stock offer valuing Family Dollar at $8.5 billion. Another vote is scheduled for January 22.
The latest postponement was advocated by proxy adviser Institutional Shareholder Services Inc. to leave open the possibility that Dollar General can strike a deal with Federal Trade Commission regulators or otherwise sweeten its bid, The Wall Street Journal reported.
The FTC is reviewing the agreement between Family Dollar and Dollar Tree as well as Dollar General’s offer to see how the mergers would affect competition in the value channel.
Dollar General, headquartered in Goodlettsville, Tenn., made an unsolicited all-cash bid last summer that values Family Dollar at $9.1 billion. That offer has been consistently rebuffed by Family Dollar’s directors, who assert that it’s unlikely to win regulatory approval without significant concessions that would make the merger unattractive.
Family Dollar and Dollar General have similar business models. Both offer merchandise at multiple price points, with most merchandise selling for under $10 and about one-quarter of items priced at $1 or less.
Dollar Tree’s namesake stores price almost everything at $1, suggesting less overlap with Family Dollar’s more than 8,000 stores in 46 states.
Executives at Cheasapeake, Va.-based Dollar Tree said last month they expect to have to sell or close a "relatively small" number of stores to gain antitrust approval to buy Family Dollar.
Dollar General has pledged to divest up to 1,500 stores to satisfy regulators. When that offer failed to persuade Family Dollar directors to give its bid more weight, Dollar General launched a hostile bid directly at Family Dollar shareholders. It recently extended its tender offer to January 30 to see what might emerge from the FTC as well as to allow Family Dollar stockholders more time to opt for the more lucrative bid.
Dollar General asserts that a combination with Family Dollar would establish the scale and buying power needed to challenge Walmart.
Recent strategic shifts at Walmart seem to suggest that the retailer takes the dollar-store threat seriously. Walmart continues to experiment with smaller-format stores that can cater to consumers’ increased demand for shopping options that are fast, easy and convenient.
