Dollar General Corp., spurned twice in its attempt to buy Family Dollar Stores Inc., took its $9.1-billion offer directly to shareholders in a hostile bid.
Dollar General today commenced an offer for all Family Dollar shares at $80 each, it said in a statement. Family Dollar's board last week rejected a proposal from Dollar General at that price, citing antitrust hurdles. It has accepted a lower bid from Dollar Tree Inc. instead, saying that deal will more easily gain regulatory clearance.
Dollar General said its tender offer isn't conditional upon any financing arrangements and has written funding commitments from Goldman Sachs Group Inc. and Citigroup Inc.
The takeover fight for Family Dollar began in July, when the company agreed to be acquired by Dollar Tree for $8.5-billion, or $74.50 a share. That deal would merge the market's No. 2 and No. 3 companies, potentially creating a new leader. Dollar General then stepped in with an unsolicited bid of $78.50 in August, aiming to maintain its perch atop the industry.
After that offer was rejected because of antitrust concerns, Dollar General increased its price to $80 a share in cash. Along with the sweetened bid, it pledged to divest as many as 1,500 locations to placate regulators, up from 700 in its earlier offer. It also said it would pay Family Dollar $500-million if the deal failed to garner approval.
In snubbing Dollar General's bid, Family Dollar said its experience with Federal Trade Commission regulators reviewing the Dollar Tree deal led it to believe a Dollar General merger would have a harder time getting clearance. A combination with Dollar General would have almost 20,000 locations, making it the largest retail chain in the country by that measure.
Family Dollar and Dollar General also have a similar business model, with the chains selling products at multiple prices and mostly catering to low-income shoppers. Dollar Tree, in contrast, attracts more middle-class consumers and sells most of its items at $1. The Chesapeake, Virginia-based company has said it's ready to close as many stores as necessary to complete a merger with Family Dollar.