MATTHEWS, N.C. (AP) — Family Dollar is rebuffing Dollar General’s takeover bid, citing antitrust issues. The discounter’s board supports its existing merger with Dollar Tree.
Family Dollar Stores Inc. Chairman and CEO Howard Levine said in a statement Thursday that its board and advisers reviewed Dollar General Corp.’s offer and determined it wasn’t reasonably likely to be completed on the terms proposed.
Dollar General declined to comment.
Family Dollar became a takeover target in part because of its business struggles. The Matthews, North Carolina company has been shuttering stores and cutting prices in hopes of boosting its financial performance. In June investor Carl Icahn urged the company to put itself up for sale.
On Monday Dollar General — the nation’s biggest dollar-store chain — offered about $8.95 billion, or a $78.50 per share in cash, for Family Dollar. The Goodlettsville, Tennessee company said at the time that it believed it could quickly address any antitrust issues and was willing to divest up to 700 of its stores in order to get the necessary approvals.
In a letter sent to Family Dollar on Wednesday, Dollar General said that it believed the number of stores it was offering to divest was “more than sufficient to take this (antitrust) issue off the table.”
Last month Family Dollar agreed to an $8.5 billion deal with Chesapeake, Virginia-based Dollar Tree Inc. The transaction includes $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share held. The companies valued the transaction at $74.50 per share at the time. Including debt and other costs, Family Dollar and Dollar Tree estimated the deal to be worth approximately $9.2 billion.
Dollar General’s stock declined 76 cents to $63 in premarket trading. Shares of Family Dollar shed 16 cents to $79.65, while Dollar Tree’s stock fell 80 cents to $54.20.