Dollar General: We’re not giving up on Family Dollar deal

08/28/2014 7:35 AM

08/28/2014 5:40 PM

Dollar General executives said Thursday they’re still pushing to buy Matthews-based Family Dollar, but the retailer didn’t offer any specifics on what it plans to do after Family Dollar rejected its $78.50-a-share bid.

Family Dollar 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 and one of the Charlotte region’s most prominent companies.

“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 reiterated 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 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 so-called hell-or-high-water clause, meaning it would agree to sell as many stores as regulators require and take any other steps needed to close the deal. Family Dollar’s stock has consistently traded above Dollar General’s $78.50 offer price, closing at $79.83 Thursday, indicating some investors anticipate a higher bid.

Should the Dollar Tree deal prevail, the companies have said the Family Dollar name would remain, and many of the company’s 1,400 corporate jobs would stay in Matthews. Dollar General hasn’t said what it would do with Family Dollar’s Matthews headquarters or the company name.

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.

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