Family Dollar Delays Vote on Dollar Tree Deal Until Jan. 22

CHARLOTTE, N.C. (The Charlotte Observer/TNS) -

Investors and employees waiting to see what happens to Family Dollar Stores will have to wait a little longer.

The North Carolina-based retailer adjourned Tuesday’s shareholder meeting before a vote on a proposed sale to Dollar Tree, saying Family Dollar did not have enough support to approve the deal.

The seven-minute meeting drew a half-dozen shareholders, who seemed to be outnumbered by security personnel wearing dark suits and earpieces. CEO Howard Levine made a brief statement thanking shareholders for their votes and adjourned the meeting.

The meeting is now scheduled to resume on Jan. 22 at the same location, meaning it will be at least a month before the fate of one of Charlotte’s most prominent retailers is decided. The adjournment, which had been expected, was approved by a vote of approximately 72 million shares to 15 million shares, the retailer said.

Family Dollar is trying to build enough shareholder support to complete a deal in which it would be acquired by Virginia-based Dollar Tree for $8.5 billion in cash and stock. At the same time, Family Dollar is fending off a hostile, $9.1 billion all-cash bid by Tennessee-based rival Dollar General, which it has said would likely be blocked by federal antitrust regulators.

Dollar General signaled that they’re not backing down. Shortly after the meeting ended, Dollar General — the nation’s largest small-box discount retailer — said it will extend its tender offer to buy all of Family Dollar’s stock for $80 a share to the end of January.

“Dollar General remains committed to the proposed acquisition of Family Dollar and will continue to cooperate with the Federal Trade Commission to obtain antitrust regulatory clearance,” the company said in a news release. About 3 percent of Family Dollar’s outstanding shares have been tendered into the offer, Dollar General said.

The FTC hasn’t yet said whether it would allow or block Dollar General’s bid on antitrust concerns, or how many of the combined company’s almost 20,000 stores it would require to be divested. The federal agency is examining both Dollar General’s and Dollar Tree’s offers, to see whether they would limit competition or drive up prices.

Influential shareholder-advisory firm Institutional Shareholder Services had urged Family Dollar investors to delay the meeting so they can see more information from federal regulators.

Efraim Levy, an equity analyst with S&P Capital IQ, wrote in a note to clients that the delayed vote was “not surprising,” and could lead to a higher offer from Dollar General or Dollar Tree. He also said that since the Dollar Tree offer includes stock in the combined company as well as cash, Dollar Tree could win the bidding war without coming up to fully match Dollar General’s offer.

After the meeting, some of the shareholders who attended said they were unhappy with the outcome.

“I prefer the $80, cash — $80 is always better than $75,” said Gary Burgess, referring to Dollar General’s higher offer.

The Family Dollar takeover drama started in July. That’s when Dollar Tree first announced a plan to buy Family Dollar for $74.50 worth of cash and stock per share, a plan to which Family Dollar agreed.

Dollar General soon made a competing hostile bid of $80 a share, all in cash. Family Dollar’s board has been resolute, however, in refusing the Dollar General bid.

Joyce Lawing said Tuesday that she thinks either offer could be a good deal for Family Dollar.

“They’re all good stores,” said Lawing, who said she holds one share of Family Dollar stock. “I don’t know why we have all this controversy.”