Yet another bid talks between Family Dollar General’s (NYSE:DG) and Dollar (NYSE:FDO)

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By Thomas Copeland on September 6, 2014 Intl News

Dollar General (NYSE:DG)’s current acquisition offer will be rejected by Family Dollar (NYSE:FDO). Dollar Tree, Inc. (NASDAQ:DLTR) states that it will get rid of a few stores (as per its requirement) in order to gain antitrust clearance so that its deal may purchase Family Dollar (NYSE:FDO).

This isn’t the first rejection, an earlier offer was rejected by Family Dollar (NYSE:FDO) from Dollar General (NYSE:DG) which amounted to around $9 billion, which was then increased to $9.1 billion. The largest dollar-store of the nation – Dollar General(NYSE:DG) – revised the proposal as well in order to increase stores that it will divest willingly in the future and also included $500 million of reverse for break-up if antitrust issues surfaced.

This Friday, Family Dollar (NYSE:FDO) stated its antitrust concerns. However, Dollar General (NYSE:DG) refrained from an immediate response to the email that was sent to it.

Ever since its financial crises Family Dollar (NYSE:FDO) has been actively looking cutting prices and closing stores. Carl Icahn, a major shareholder, encouraged Mathews – a company based in North Carolina – in June, to go up for grabs.

After a month, Family Dollar Stores (NYSE:FDO) grabbed a deal with Chesapeake which is a Dollar Tree (NASDAQ:DLTR) based in Virginia for $8.5 billion. The purchase included cash amounting to $59.60 and equal to $14.90 shares of the Dollar Tree Company (NASDAQ:DLTR) for every share owned. The value of the transaction by the companies was $74.50 per share at the time of the deal. While including other costs and debt, Dollar Tree (NASDAQ:DLTR) and Family Dollar (NYSE:FDO) reported the deal’s worth to be around $9.2 billion. Both the companies stated on Friday that they were expecting the deal to go through by the end of November at the latest.

Three days after the announcement of divesting of 1,500 stores came from Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR) gave its consent to get on with the deal and get it finalized. The original deal included Dollar General (NYSE:DG) divesting only 700 stores.
CEO of Dollar Tree (NASDAQ:DLTR), Bob Sasser reported in one of his statements that he thinks the company may have to divest only a few of the stores since it has a different business model compared to Family Dollar (NYSE:FDO). He said that their pricing as well as assortment of products is not affected by the competition offered by local stores and that they have limited overlapping of stores.

Both the Dollar General (NYSE:DG) and Family Dollar stores (NYSE:FDO) operate on a model that is a bit different than Dollar Tree (NASDAQ:DLTR). Both of the former sell products at different prices whereas Dollar Tree (NASDAQ:DLTR) sells items a buck rate. Both companies expect the Federal Trade Commission to ask for more details (second request) regarding the transaction on Monday.
Family Dollar (NYSE:FDO) had to see its stock drop by $1.05 that came to stand at a value of $79.01 in Friday’s morning session. Shares of Dollar Tree (NASDAQ:DLTR) went up by 16 cents reaching a value of $55.18.