Dollar General Ready To Pay Top Dollar To Win The Dollar Store War
Comment Now
Family Dollar Stores previously rejected Dollar General ’s takeover bid citing antitrust concerns, but on Tuesday Dollar General has come back with a new effort to win the dollar store war.
Dollar General has increased its bid for Family Dollar, offering $80 a share in cash, up from $78.50 a share. In addition, Dollar General said it would be willing to sell 1,500 stores to appease federal regulators and pay $500 million to Family Dollar if the transaction is upended for antitrust reasons.
Wall Street has expected that Dollar General would win the battle for Family Dollar since Dollar General first attempted in August to break up the deal that rival dollar-store chain Dollar Tree launched in July that would pay Family Dollar Stores’ shareholders $74.50 a share. Dollar General said it would pay a $305 million break-up fee to Dollar Tree to get the deal done.
English: A Dollar General variety shop at 800 Broad Street in Durham, North Carolina. (Photo credit: Wikipedia)
Dollar General has said that a deal for Family Dollar would create synergies of between $550 million and $600 within three years, mostly from cost savings.
“We are confident that our enhanced proposal sufficiently addresses any concerns that led Family Dollar’s board of directors to reject our prior proposal without any discussions between our companies,” Rick Dreiling, Dollar General’s CEO, said in a statement. Dreiling, who said in June that he would resign within a year, has changed his mind and now says he will stay on as CEO until May 2016 to do this deal.
