Dollar General solicits votes against Family Dollar deal

Dollar General on Friday ratcheted up its fight to break up a planned acquisition of Family Dollar by a third company, launching an effort to solicit shareholders to vote against the deal.

The solicitation, filed Friday with the Securities and Exchange Commission, comes on top of Dollar General’s hostile bid to buy Family Dollar for $80 a share. The discount retailer has rejected Dollar General three times in the last month, as the Family Dollar board of directors seeks instead to have the company be acquired by Dollar Tree.

“We believe our $80.00 per share all-cash offer is a superior alternative for the Family Dollar stockholders because it provides greater financial value than the proposed Dollar Tree merger,” Dollar General wrote in its message to shareholders.

Family Dollar agreed in July to be acquired by Dollar Tree for $74.50 worth of cash and stock. Although the overall offer is about $640 million less than Dollar General’s $9.1 billion hostile bid, Family Dollar’s board has said the Dollar General deal is sure to be blocked by federal regulators due to antitrust concerns.

The Dollar Tree deal, according to Family Dollar’s board, is more likely to be approved by the Federal Trade Commission. But Dollar General insists the antitrust concerns are a smokescreen, and that regulators would approve a deal with Family Dollar.

The Matthews-based company’s shareholders must vote on any deal. Family Dollar hasn’t set a date for a special meeting.

In a statement, Family Dollar said the company’s board still strongly supports the Dollar Tree deal, “which delivers attractive value in the form of immediate upfront cash and upside participation in a combined Dollar Tree-Family Dollar entity, as well as closing certainty.”

Dollar General’s tactic is similar to that of two Brazilian firms that are trying to buy Charlotte-based Chiquita Brands International and break up the banana company’s planned merger with Irish-based Fyffes. The companies, Cutrale and Safra, solicited votes from Chiquita shareholders in advance of that company’s meeting to approve the Fyffes deal.

Cutrale and Safra forced a postponement of Chiquita’s meeting, which had been scheduled for this week, to Oct. 3. After influential shareholder advisory firms threw their support behind Cutrale and Safra, the Brazilian firms also got Chiquita to open its books and start negotiations.