Family Dollar delays shareholder vote on acquisition

Matthews-based Family Dollar said Wednesday that it plans to delay a shareholder vote on its proposed acquisition by Dollar Tree nearly two weeks, to give federal antitrust authorities more time to review the deal.

The vote could determine the fate of the discount retail company, founded in Charlotte in 1959. Family Dollar is trying to be acquired by Dollar Tree for $8.5 billion in cash and stock, even as it fends off a hostile, $9.1 billion all-cash bid by rival Dollar General.

The shareholder vote on the Dollar Tree deal is now scheduled for Dec. 23. Family Dollar said it expects to receive updated information from the Federal Trade Commission about the agency’s review of the Dollar Tree deal and update shareholders in the first week of December.

“The special meeting has been rescheduled to provide Family Dollar shareholders with sufficient time to review the additional disclosure in advance of the meeting,” the company said in a news release. A Family Dollar representative declined to comment further.

The vote will likely hinge on whether shareholders believe Family Dollar’s assertion that the FTC would approve the Dollar Tree deal and block the Dollar General deal based on antitrust concerns. If Family Dollar shareholders believe Dollar General can complete its acquisition, they might vote for the Dollar General deal because it is worth more money.

Analyst Brian Yarbrough of Edward Jones said the delayed vote, which had been planned for Dec. 11, could be a sign that Family Dollar is having trouble gathering the necessary shareholder votes to complete the Dollar Tree deal. By delaying, the company could be buying time to build shareholder support.

The company could also be hoping that the FTC tells Dollar General it would block the deal, he said.

“I personally don’t think shareholders of Family Dollar are going to approve this (Dollar Tree) deal until they get better clarity on the Dollar General deal,” Yarbrough said. “This thing’s about as clear as mud.”

Family Dollar’s stock continued to trade above Dollar Tree’s offer price of $74.50 a share. The stock remained above $78 a share Wednesday.

Yarbrough said that indicates some shareholders anticipate a higher offer from Dollar Tree or expect the Dollar General bid to succeed.

The New York Post, citing anonymous sources, reported Wednesday that the FTC told Dollar General it would have to sell 4,000 stores to complete the Family Dollar deal. That’s a fifth of the combined nearly 20,000 stores the combined company would operate. Such a divestiture could make it tough for Dollar General to make the deal work.

Dollar General said in a statement Wednesday that it is working with the FTC “regarding the extent of potential divestitures that would be required in connection with an acquisition of Family Dollar and has been making good progress.”

Dollar General said it expects to give shareholders an update before the Dec. 23 vote about its antitrust review with the FTC.

Dollar Tree, which would operate a combined 13,000 stores after acquiring Family Dollar, has promised to sell as many stores as the FTC requires to close the deal. That’s what’s called a “hell or high water” clause. Dollar General, on the other hand, has said it would sell up to 1,500 stores to secure the FTC’s deal but hasn’t adopted a “hell or high water” clause.

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