GOODLETTSVILLE, Tenn. -- In a hostile takeover bid, Dollar General Corp. is going directly to Family Dollar shareholders, announcing that it has commenced a tender offer to acquire all outstanding shares of Family Dollar Stores Inc. for $80 per share in cash.
"Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares," said Rick Dreiling, chairman and CEO of Dollar General. "By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer."
Dollar General is filing documents with the U.S. Securities & Exchange Commission (SEC) and is filing for clearance under the Hart-Scott-Rodino (HSR) Act, which will allow the company to begin the antitrust approval process with the Federal Trade Commission (FTC).
"We now can begin the antitrust review process and will have an opportunity to present our position directly to the FTC," Dreiling said. "As we previously have stated, we are confident in the results of our antitrust analysis, and we look forward to a constructive dialogue with the FTC."
Dollar General's all-cash offer provides Family Dollar shareholders with a "substantially superior" valuation to the $74.50-per-share cash-and-stock offer announced by Dollar Tree Inc. on July 28. Dollar General's offer provides Family Dollar's shareholders with approximately $640 million of additional aggregate value over Dollar Tree's offer and represents a premium of 31.9% over the closing price of $60.66 for Family Dollar stock on the day prior to the Dollar Tree announcement.
As part of a definitive merger agreement with Family Dollar, Dollar General would be willing to agree to divest up to 1,500 stores if required by the FTC and to pay Family Dollar a $500-million reverse breakup fee if the transaction did not close for reasons related to antitrust approvals.
The tender offer is scheduled to expire Oct. 8 unless Dollar General extends it.
Dollar General's maneuver is not without its risks, said a Wall Street Journal report, because it is offering to take over the company without having had access to its confidential financial information.
Family Dollar confirmed Dollar General's unsolicited conditional tender offer.
"The terms of the tender offer are the same as those in the proposal made by Dollar General on Sept. 2, 2014, which the board of directors of Family Dollar rejected unanimously on Sept. 5, 2014 on the basis of antitrust regulatory considerations," the company said.
"Family Dollar's board of directors, in consultation with its financial and legal advisors, will review and consider Dollar General's tender offer in accordance with applicable law," its statement continued. "Following completion of this review and consideration, Family Dollar will advise shareholders of the board's position regarding the tender offer by making available to shareholders, and filing with the [SEC]. … Family Dollar shareholders are advised to take no action."
It added, "Family Dollar's board of directors has not changed its recommendation in support of the merger with Dollar Tree."
Matthews, N.C.-based Family Dollar currently operates more than 8,100 stores in 46 states. Goodlettsville, Tenn.-based Dollar General has more than 11,000 stores in 40 states. Chesapeake, Va.-based Dollar Tree currently operates more than 5,000 stores in 48 states and five Canadian provinces.
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