Family Dollar Stores Inc rejected Dollar General Corp’s $8.95-billion acquisition offer, citing antitrust concerns, and reaffirmed its support for a buyout offer from Dollar Tree Inc.
“ ... We will not jeopardize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations,” Ed Garden, an independent director on Family Dollar’s board, said in a statement on Thursday.
Garden is also a co-founder and partner at Trian Fund Management LP, which was Family Dollar’s second-largest shareholder as of July 27, with a 7.3 per cent stake.
Dollar General, in a letter to Family Dollar’s board late on Wednesday, questioned if Family Dollar Chief Executive Howard Levine was being driven by self-interest in his support of Dollar Tree’s offer.
Levine said on Thursday that the letter “contained blatant mischaracterizations and did nothing to address the antitrust issues in Dollar General’s proposal.”
Dollar General, the largest U.S. dollar store operator, alleged that it had been led astray by Levine in talks on a potential buyout, notably during a meeting on June 19.
In response, Family Dollar said representatives of Dollar General “stated that they were not interested in pursuing a strategic transaction at that time.”
Dollar General had said in its offer that it was prepared to divest up to 700 retail stores to get regulatory approval for the deal, the same percentage that Dollar Tree had proposed.
Dollar Tree made an $8.5-billion cash-and-stock offer for Family Dollar on July 28, to fend off growing competition from Wal-Mart Stores Inc and Dollar General.
Dollar Tree reported a 2.6 per cent fall in quarterly profit on Thursday as its costs rose.
Dollar stores have struggled in a weak U.S. economy as smaller neighbourhood stores and other large retail chains chase value-conscious consumers by offering cheaper items.
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