CHESAPEAKE, VA—Dollar Tree Inc. and Dollar General traded words Friday about their rival bids to acquire Family Dollar Stores Inc. Chesapeake, VA-based DLTR said DG's unsolicited tender offer for FDO entails “fundamental risks” to FDO shareholders, while DG said its documents and data tell “a very different story” than the picture painted by DLTR's release.

Both would-be buyers said they're in active discussions with the Federal Trade Commission about their respective bids for Matthews, NC-based FDO, which at 8,100 locations across the US and Canada is the second largest operator in the space. DLTR, the smallest of the three at 5,282 locations, said it believes the merger agreement between it and FDO, originally announced this past July, has a better chance of clearing the FTC's antitrust scrutiny.

“We believe that the FTC staff appreciates that Dollar Tree and Family Dollar are different retailers with complementary business models,” DLTR said in a release Friday. DLTR's model is based on pricing all of its merchandise at $1 or less, while FDO “sells primarily branded consumable products at multiple price points up to $20 or more. Their customers expect Family Dollar to carry the same assortment of products week in and week out. Our customers have no such expectation.”

Accordingly, DLTR says it expects that the combined company would have to divest a “relatively small” number of stores to satisfy FTC requirements. That being said, it revealed that the federal agency has expressed concerns about FDO's current pricing rules and how this could result in price increases in certain stores if there were no competing DLTR location nearby; about certain overlaps between FDO and DLTR's Deals brand; and about certain selling areas in which the two stores face limited competition.

DLTR asserts that because of overlap between DG and FDO's business model, its larger rival would be forced to sell off “far in excess of the 1,500 stores” that DG offered to divest in its tender offer for FDO. This could, DLTR asserts, lead DG's proposal to fall through “due to the scope of the unprecedented FTC-required divestiture” or changes in the economy during a protracted FTC review process.

For its part, Goodlettsville, TN-based DG, which operates more than 11,000 stores, said its strategic pricing decisions are driven by Walmart, rather than FDO, and that more than 90% of its SKUs are nationally priced. “Dollar General is confident that its approach to strategic and pricing decisions is both correct and superior to that of Family Dollar and Dollar General has no intention of adopting a flawed strategy—either now or after an acquisition of Family Dollar—that it believes would impair its ability to compete with Walmart and lead to inferior financial performance,” according to a release.

Shareholders of both DLTR and FDO are scheduled to vote on the proposed merger between the two companies on Dec. 23. DLTR said Friday it believes a merger could be finalized by February of next year.