Dollar General plays homewrecker, bidding for Family Dollar
Monday, August 18, 2014 - 01:21
Dollar General's unsolicited all-cash bid for Family Dollar is $4 per share higher than Dollar Tree's dowry. Fred Katayama reports.
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Enter the homewrecker. Dollar General made an unsolicited bid to try to break up the planned marriage between Dollar Tree and Family Dollar. It's offering Family Dollar a dowry of $78.50 a share, and it's all cash. That's $4 more than the stock-and-cash bid Dollar Tree made late last month for Family Dollar.
Dollar General is much bigger than Dollar Tree. So a combination of Dollar General and Family Dollar would create a network with 7,000 more stores than a merger with Dollar Tree. And Dollar General says it would produce nearly twice as much in cost savings. It says it's prepared to sell up to 700 stores to satisfy regulators.
Many investors were surprised when the smaller Dollar Tree announced a merger with Family Dollar because they had expected Dollar General to enter a bid. Activist investor Carl Icahn had been pushing Family Dollar to sell itself to Dollar General. The new chapter in this drama drove shares of Dollar General and Family Dollar significantly higher as Dollar Tree's fell.
Dollar General CEO Rick Dreiling will postpone his planned retirement to run the combined company. He says if he succeeds, the Family Dollar stores will look the same as Dollar General's on the inside.
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