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Family Dollar Rejects Dollar General Proposal

Family Dollar Stores, Inc. announced Thursday that it has rejected Dollar General’s takeover proposal. Dollar General offered Family Dollar a bid of $9.7 billion earlier this week, or $78.50 per share, which surpasses Dollar Tree’s bid, made in July for $8.5 billion.

Family Dollar said it rejected the bid based on antitrust regulatory considerations. The company did however, unanimously reaffirm its recommendation supporting the merger agreement with Dollar Tree, Inc.

Howard R. Levine, chairman and CEO of Family Dollar, said, “Our Board of Directors, with the assistance of outside advisors and consultants, has been carefully analyzing the antitrust issues in a potential combination with Dollar General since the beginning of this year. Our Board reviewed, with our advisors, all aspects of Dollar General’s proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed.”

Combined, the acquisition, between Dollar General and Family Dollar, would solidify Dollar General’s position as the largest small-box discount retailer in the U.S., with 20,000 stores in 46 states, more than 160,000 employees, and sales exceeding $28 billion, the company revealed in a statement. The merger would also help expand Dollar General’s market share, which is primarily based in rural areas, to more metropolitan communities.

Dollar General previously agreed to divest up to 700 stores in order to make up for any antitrust issues.

Ed Garden, a co-founder and partner at Trian Fund Management, L.P., a large shareholder of the company, said, “Given the significant antitrust issues involved with Dollar General’s proposal, we will not jeopardize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations. We remain fully committed to the Dollar Tree transaction.”

The press release out Thursday also revealed that Family Dollar believes an agreement with Dollar Tree would offer substantial value to its stockholders.