Dollar General: We’re Not Giving Up on Family Dollar Deal

(The Charlotte Observer/MCT) -

Dollar General executives said Thursday that they’re still pushing to buy North Carolina-based Family Dollar, but the retailer didn’t offer any specifics on what it plans to do following Family Dollar’s rejection of its $78.50-a-share bid.

Family Dollar already agreed in July to be acquired by Virginia-based Dollar Tree, a smaller competitor, for $74.50 a share, made up of cash and stock. Tennessee-based Dollar General entered the picture last week with an unsolicited bid, which Family Dollar’s board of directors rejected.

That move has set the stage for a fight over Family Dollar, the nation’s No. 2 dollar store.

“I don’t want to give up on a deal yet,” Dollar General CEO Rick Dreiling told investors Thursday, as the retailer released its second-quarter financial results. “We continue to carefully review our options regarding our proposal, and we hope Family Dollar will come to the table.”

Family Dollar’s board said it rejected Dollar General’s offer because of the risk that antitrust regulators would block the deal. The combination would create the nation’s biggest small-box discount retailer.

A deal with Dollar Tree is far less likely to be blocked, Family Dollar has said, and is the safer bet for shareholders.

Dollar General has said it would sell up to 700 of the combined company’s almost 20,000 stores to win approval for the acquisition, and Dreiling continued to say Thursday that would be enough.

“While much has been said about the antitrust issues, we remain confident these issues are very manageable,” Dreiling said.

But Dreiling and other Dollar General executives remained quiet on their specific plans to pursue Family Dollar, and executives said Thursday that they wouldn’t answer follow-up questions.

Analysts say the company could increase its offer, or go straight to shareholders and try to solicit votes to block the Dollar Tree deal. Dollar General could also agree to a clause saying that they will sell as many stores and take any other steps regulators require to close the deal. Family Dollar’s stock has consistently traded above Dollar General’s $78.50 offer price, indicating some investors anticipate a higher bid.

For the second quarter, Dollar General reported that its profits rose 2 percent, to $251 million, while revenue grew 7.5 percent, to $4.7 billion.