Source Close to Family Dollar Thinks Dollar General Bid Finished

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

A source close to Family Dollar said Thursday that the company views Dollar General’s hostile bid to buy the retailer as finished, following Dollar General’s announcement Thursday that it needs more time to get antitrust approval.

Family Dollar is trying to fend off Dollar General and instead complete a planned sale to rival Dollar Tree. Even though Dollar General is offering $9.1 billion — $600 million more than Dollar Tree — Family Dollar CEO Howard Levine has said the Federal Trade Commission is more likely to block Dollar General because of monopoly concerns.

In a statement Thursday, Dollar General said it needs at least until early March to find out whether the FTC will allow or block the deal, and how many stores federal regulators would require Dollar General to sell. That’s more than a month after a special meeting next Thursday at which Family Dollar shareholders are scheduled to vote on the Dollar Tree deal.

Dollar General had hoped to have more information from the FTC to sway shareholders before the meeting. The company didn’t immediately respond to a request for comment Thursday.

The source close to Family Dollar said that since Dollar General didn’t take any steps to sway shareholders — such as promising to sell as many stores as the FTC requires or increasing its bid — Dollar General’s push to buy the company is effectively over.

Some analysts agreed, and told investors Thursday that Dollar Tree is the likely winner in the takeover drama.

While saying it’s not official yet, Sterne Agee analyst Charles Grom wrote in a report that Dollar General’s press release likely ends the seven-month-long “dollar store drama” with Dollar Tree winning Family Dollar.

“While it’s plausible that (Family Dollar) holders could pass on the current (Dollar Tree) offer, we think this development is highly unlikely,” Grom wrote.

An analyst with UBS wrote that a higher offer from Dollar General isn’t likely now, and Dollar Tree will likely win next week’s shareholder vote in Charlotte.

“If (Dollar General) were to come back over the next few days with a higher offer, it could be perceived as not coming from a position of strength. Thus, we think it’s unlikely,” Michael Lasser wrote.

In trading Thursday, Family Dollar shares fell 1.5 percent to $75.14, or 64 cents above Dollar Tree’s offer price of $74.50. The stock was well below Dollar General’s $80-per-share offer, indicating some shareholders were losing confidence that Dollar General would win.