Family Dollar's Board to DG: No Thanks, Again

MATTHEWS, NC—The board of Family Dollar Stores Inc., which currently plans to merge with Dollar Tree Inc., has turned down Dollar General Corp. a second time, rejecting the $80/share offer from the dollar-store sector's biggest player. The board's unanimous rejection of DG's Sept. 2 unsolicited bid cited the same basic concern as its turndown of DG's initial $78.50/share last month: antitrust considerations. DG made both offers after FDO and Chesapeake, VA-based DLTR announced plans to merge.

Although Goodlettsville, TN-based DG offered to divest as many as 1,500 locations in order to complete an FDO acquisition, the Matthews, NC retailer's board says that may not be enough. “Far more than 1,500 Family Dollar stores are in zones where pricing is based solely on the presence of local Dollar General stores, and thousands more are in zones where pricing is based on both Dollar General and Wal-Mart stores nearby,” according to a statement.

In all, some 6,000 Family Dollar locations are within three miles of a Dollar General store. There's a “serious risk,” says FDO, of the FTC taking the position that “Family Dollar's pricing policies would immediately lead to higher prices in thousands of locations if Dollar General were no longer an independent competitor.”

Separately, DLTR on Friday announced that it would divest as many stores as necessary to satisfy antitrust concerns under a revised merger agreement with FDO. The cash-and-stock transaction is now expected to close by the end of November, an earlier time frame than originally projected.

GlobeSt.com's calls to DG for comment were not returned by early Friday afternoon. The company had threatened earlier this week to go hostile with a takeover bid if the FDO board rejected its offer.