According to a statement that came out on Wednesday, that the boards of director of the Family Dollar (NYSE:FDO) Stores Inc. has a special piece of advice for the shareholders of the company and that was not to accept the $9.1 billion takeover of hostile nature by the Dollar General (NYSE:DG) Corp.

It has happened twice that the board has said no to the offers put forward by the Dollar General Corp (NYSE:DG). It happened again when the board of Family Dollars rejected the offer and preferred their contract of worth 8.5 billion dollars, with the Dollar Tree (NASDAQ:DLTR) Inc. which is based in Virginia.

This time, Ed Garden, one of most important investors of the Family Dollar (NYSE:FDO) and a member of the board of directors (also the co-founder of the Trian Fund Management) has taken into special consideration the fact that the Dollar Tree (NASDAQ:DLTR) deal has actually removed the risk of antitrust off the scene. The company, Family Dollar (NYSE:FDO) has been seen quoting its concerns about antitrust over and over again and using it as a reason to reject the offers made by Dollar General (NYSE:DG).

Dollar General (NYSE:DG) has recently shown its willingness to let go of 1500 of its stores as an attempt to avoid the similar problems of antitrust with regulators.

According to the latest news feed from the Family Dollar (NYSE:FDO), Ed Garden has said that the attempts of a hostile takeover by the Dollar General (NYSE:DG) will not meet its successful end because he believes that the regulators will look at the antitrust issues and will reject it straight away.

Dollar General (NYSE:DG) has declared that their offer is valid for a limited time only and the validity of their offers will expire on the 8^th of October at 5 in the evening unless there is some extension in the proposal. The company, Dollar Genera (NYSE:DG), has also declared that is will quickly file applications to start on the procedure with Federal Trade Commission for the approval of antitrust.

Currently the company, Dollar General (NYSE:DG), is putting forward an offer according to which the price of each share of Family Dollar (NYSE:FDO) will be eighty dollars. On the other hand Family Dollar (NYSE:FDO) is being offered a price of 74.50 dollar for each share by another company, aka Dollar Tree (NASDAQ:DLTR). It is believed that about 80 percent of the payment will be in cash and the remaining will be in stocks.

A variety store chain in America with as many as 8100 locations, Family Dollar (NYSE:FDO) is considered as the retailer that holds second place when it comes to the size. With its headquarters in Matthews, North Carolina, this company has 1400 people as its employees.  It is a public company that has food, housewares and clothing as their main products. The company generated revenue of 10.4 million dollars last year where as its operating income was 688 million dollars.

The discount store chain, Dollar General’s (NYSE:DG), deal didn’t go through because it wouldn’t clear the anti-trust faction scrutiny. The North Carolina based company based in Matthews, Family Tree (NASDAQ:DLTR) is pretty vocal that it fears the anti-trust group posing a lot of question directed towards them merging with Dollar General (NYSE:DG).

However, so bent upon acquisition are they that the willingness to divest 1500 stores is an option they are willing to consider. Not only that but Dollar General (NYSE:DG) is also ready to pay $500 reverse backup fees in more antitrust issues get in the way of its takeover plan.

The Goodlettsville, Tennessee based company, Dollar General (NYSE:DG) is bound to win this acquisition tug of war, speculates the analyst Sterne Agee. He thinks that the offer presented to family Dollar (NYSE:FDO) is a solid offer making good financial sense. Family Dollar (NYSE:FDO) is not in a great situation and has still received good bids from two companies willing to buy it out. They are desperately attempting to attract more and more customers and has been cutting prices considerably, however they were still forced to shut down some of its stores.

June this year, Family Dollar’s (NYSE:FDO) activist investor, Carl Icahn forced the company to sell itself out. In July, Family Dollar (NYSE:FDO) accepted the rival bid of $59.6 in cash, $14.90 in Dollar Tree (NASDAQ:DLTR) shares amounting to a total of $74.5 for each share being held. Family Dollar (NYSE:FDO) is sure that this deal will not face any anti-trust hurdles.

The similarity which will raise an eyebrow from anti-trust is the fact that both Dollar General (NYSE:DG) and Family Dollar (NYSE:FDO) sell products which fall into different price categories. Dollar Tree (NASDAQ:DLTR) however, only sells products costing a dollar.

Rick Dreiling, Dollar General (NYSE:DG) CEO and Chairman, tempted the shareholders of family Dollar (NYSE:FDO) by stating that if they choose their bid Family Dollar (NYSE:FDO) shares would get an immediate liquidity boost. The strategy was based on the hope that all Family Dollar (NYSE:FDO) shareholders would opt for the Dollar General (NYSE:DG) bid, putting pressure on the Family Dollar (NYSE:FDO) management and board of directors.

October 8 will mark the expiry of the bid from Dollar General (NYSE:DG)which was originally priced at $78.5 per share, now includes a 32% premium for the family Dollar (NYSE:FDO) stock. The day the Dollar Tree (NASDAQ:DLTR) deal was announced, Family Dollar’s (NYSE:FDO) share price reduced by 13 cents when trading in July. Earlier this month their stock price hit an all-time high record of $80.97.

Seems that this financial war has momentarily solved their problems of reduced foot traffic; the shareholders would focus on the operational problems of the company once the sale of the company goes through.

While it cannot be denied that the company’s revenue increased by 7.50% – from $4.39 billion to $4.72 billion – the figure came short of the predicted $4.77 billion by analysts. Improvement was undeniably seen in the comparable-store sales for the previous 26 quarters due to the increase of in-store traffic and average ticket size with annual metric rises by 2.1%. However, it was below the 2.9% rise prediction.

Dollar General (NYSE:DG)’s store sales were strongest in May with annual growth of more than 3.5%. Sales wavered in June and July as economic uncertainties prompted consumers to spend less.

The quarter’s strong store sales comprised of low-margin consumables like tobacco, candy, snacks, and carbonated beverages, which surpassed the growth of non-consumable items. The quarter saw a solid growth in the categories of home products and apparel as well.

A comparison with the figures from a year ago, Dollar General (NYSE:DG)’s consumable sales improved by 8.3%, seasonal sales increased by 3.1%, home products sales upped by 7.5%, and apparel sales inclined for 6.9%. Furthermore, year to date, the company opened 426 and relocated 585 stores, which greatly contributed to their sales performance for the quarter.

Despite the company’s struggle brought about by tough competition in the market, Dollar General (NYSE:DG)’s net income saw a 2.4% increase ($251.3 million) this quarter, which is $0.83/diluted share if we were to match it with average analyst estimates. In addition, an improvement by 6% was seen in the U.S. dollar-store giant’s gross profit. This margin compression is attributed primarily to promotion markdowns coupled by the increase in low-margin consumable sales as mentioned earlier. A gross margin compression down from 31.3% from exactly a year ago to 30.8% was a result of the company’s spending on marketing activities for the promotion of their products to keep up with its competitors.

Dollar General (NYSE:DG) CEO Rick Dreiling correlated the market’s current macroeconomic status with the company’s expenditures for merchandise distribution and with the pressure received by clients in their consumption of products behavior. The management sees the decrease in customer consumption as a monumental dip, and therefore, refuses to surrender their bid in acquiring Family Dollar Stores (NYSE:FDO).

The company’s officials lowered their same-store sales guidance for the fiscal year ending January 2015. The same store-sales are predicted to increase from 3% to 3.5% for the fiscal year as opposed to the previous forecast from 3% to 4%. Dollar General (NYSE:DG)’s management remains optimistic in sealing the deal with Family Dollar (NYSE:FDO) and opted to maintain an 8% to 9% growth estimate for the entire year.

The company faces an uncertain direction as the stability of their future greatly depends on the Family Dollar (NYSE:FDO) deal. Dollar General (NYSE:DG)’s second quarter performance was short of satisfactory and unless an effective strategy is applied, their income is likely to see a drop as competition in the market is continuously becoming stiff in order to meet the demands of customers who are by every bit being made to practice frugality.

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.

Dollar General Corp (NYSE:DG), the top ranked deep-discount retailer also said that they are willing to pay $ 500 million break-up fee should the deal be rejected on the basis of running afoul of competition law – which was the reason Family Dollar Stores, Inc (NYSE:FDO) declined the offer previously.

Once the deal fell apart, Family Dollar Stores, Inc (NYSE:FDO) instead opted for an $8.5 billion cash-and-stock bid from Dollar Tree Inc. (NASDAQ:DTLR). With the new offer, Family Dollar Stores, Inc (NYSE:FDO) has stated that it would review the offer; however, they would still stick to the deal with Dollar Tree Inc (NASDAQ:DTLR)

Family Dollar Stores, Inc (NYSE:FDO) shares were up by almost half a percent, trading at $80.52 in premarket on Tuesday. This suggested that the investors indeed had expected higher offers.

Rick Drieling, Dollar General Corp (NYSE:DG) Chief Executive wrote a radical letter to the board of Family Dollar Stores, Inc (NYSE:FDO) in which he stated that if they refused to engage with the company about the revised proposal, Dollar General Corp (NYSE:DG) would be forced to take the offer straight to the shareholders.

Currently, the dollar chains are struggling with low gross margin growth, trying to keep the lower-income customers from being lured by Wal-Mart Stores, Inc. (NYSE:WMT).

Wolfe Research noted that the merger of Dollar General Corp (NYSE:DG) and Family Dollar Stores, Inc (NYSE:FDO) would prove to be a healthy competition for Wal-Mart Stores, Inc. (NYSE:WMT)

In context of antitrust clearance, Dollar General Corp (NYSE:DG) said that it was willing to sell 1500 stores to clear the antitrust review, up from their previous proposal of 700 stores.

The company claimed that they have hired Richard Feinstein, a former director of the Bureau of Competition at the Federal Trade Commission, to further validate the company’s antitrust analysis.

Rebuffing antitrust concerns, Dollar General Corp (NYSE:FDO) said that their documents were evidence to the fact that they offered no special products, as the products they offer are the same as offered at any retailer or grocery store.

It further stated that it was actually Wal-Mart Stores, Inc. (NYSE:WMT) that was the primary driver for the company’s pricing decisions.

Family Dollar Stores, Inc (NYSE:FDO) seems to be more inclined towards the offer of Dollar Tree, Inc. (NASDAQ:DLTR), as it is friendlier to their management.

Chief Executive of Family Dollar Stores, Inc (NYSE:FDO), Howard Levine, son of Family Dollar   Stores, Inc (NYSE:FDO) founder, would remain CEO of the Matthews, North Carolina based company, should it be bought by Dollar Tree Inc, (NASDAQ:DLTR). However, if Dollar General Corp (NYSE: DG) succeeds in buying Family Dollar Stores, Inc (NYSE:FDO), Levine is expected to lose his job.

Dollar general Corp (NYSE: DG) has beefed up its antitrust advisory team, to subjugate any further antitrust issues.

The numbers on the book and analysts suggests that Family Dollar Stores, Inc (NYSE:FDO) should have no concerns with anything considering the raised bid and clearance of antitrust issues is evidence that Dollar General Corp (NYSE:FDO) is clearly interested in the deal. However time would tell whether the deal blooms or blows out of proportion.

Just a few days ago, the chief executive officer of Dollar General, Rick Dreiling, offered to purchase Family Dollar for $9 billion in cash. Currently, Dollar General leads the race in market share in the United States, while Family Dollar holds its position at a close second.

This attempted merger was an effort to push out the smaller competing corporations, including Dollar Tree Inc (NASDAQ:DLTR) who signed a deal to buyout Family Dollar about three weeks before Dollar General made its deal. Family Dollar’s management board stated earlier this week that it would look over and discuss the offer made by Dollar General, which valued the company’s shares at $78.50 per share. However, it seems that it isn’t likely for a deal to happen between the two companies because Family Dollar continued to recommend investors and shareholders to vote for its deal that valued its shares at $74.50 per share with Dollar Tree.

Neither Family Dollar nor Dollar Tree responded to requests for comments.

Mr. Dreiling from Dollar General expressed his surprise over Dollar Tree’s offer for Family Dollar in July, but he has put those events behind him. Dreiling stated that he wished to get the deal with Family Dollar done as soon as possible.

Dreiling also stated that when he met with Mr. Levine from Family Dollar to discuss about the potential merger, Mr. Levine did not mention to him that he was in talks with Dollar Tree about a possible deal then. Dreiling stated that Levine failed to make it known that there was any urgency to act or that the company had other offers on the table.

Dreiling also said that Dollar General has shown its interest in a merger with Family Dollar on multiple occasions, in which Levine reciprocated the enthusiasm and showed his own interest in the social issues of a merger, including his desire to be chief executive officer of the combined companies. Dreiling states that he is wondering if Dollar General does not meet those desires, would Levine pursue a deal with Dollar Tree instead.

A few days ago, Carl Icahn published a criticism piece of Family Dollar’s Levine. Icahn was the activist investor who campaigned publicly and strongly encouraged Family Dollar to put itself up on the market for sale.s

Icahn sold his stake in Family Dollar after Dollar Tree announced its bid for Family Dollar. However, the billionaire investor still commented on the internal logistics behind Family Dollar’s negotiating moves. He said that Family Dollar will likely embrace the deal with Dollar Tree because that would allow the chief executive officer Mr. Levine to retain his current position.

Mr. Icahn said that it was surprising that Family Dollar is willing to agree to a $305 million breakup fee to Dollar Tree before making sure that Dollar General was out of the game. He expressed his distaste for how far executive boards will go to protect the company’s chief executive officer at the expense of shareholders.