Dollar Store Wars Heat Up2 Sep, 2014 By: Erik Gruenwedel
Dollar General ups bid for Family Dollar to $9.1 billion; may go hostile direct to shareholders
Dollar General Sept. 2 upped its unsolicited acquisition offer for Family Dollar to $9.1 billion — despite the latter’s refusal to accept a previous $8.95 billion bid and instead agree to rival Dollar Tree’s lower $8.5 billion offer.
Dollar General, the No. 1 ultra-discount retailer in the country — in a letter to Family Dollar’s board — said it would take the necessary steps to mitigate anti-trust concerns cited by Family Dollar’s management for not accepting the previous deal.
Specifically, Dollar General said it would pay upwards of $500 million in possible break-up fees owed Dollar Tree should the latter’s accepted offer be refused. It said it would also shutter 1,500 stores to appease regulators.
Dollar General also said it would circumvent the board and appeal directly to shareholders.
"In the event you refuse to engage with us regarding our revised proposal, we will consider taking our persuasive and superior proposal directly to your shareholders," Dollar General CEO Rick Dreiling said in the letter.
Dreiling said Dollar General’s bid is not intended to undermine the dollar store market, rather it is designed to compete more effectively against Walmart, the world’s largest retailer.
For the home entertainment industry, Dollar General and Family Dollar offer last-stop markets for catalog DVDs priced from $3. With Dollar Tree adamant at sticking to a $1 price point for all products, DVD selections are largely limited to rentals through Redbox kiosks in front of stores.