MATTHEWS, N.C. -- Family Dollar Stores Inc. on December 23 adjourned a special meeting of stockholders convened to vote on its proposed merger with Dollar Tree Inc., saying there were insufficient votes to adopt the Dollar Tree merger agreement. It rescheduled the vote for a Jan. 22, 2015, special meeting.
Stockholders of the Matthews, N.C.-based discount retailer adopted the adjournment proposal by a vote of approximately 72 million shares to 15 million shares.
Dollar Tree and Family Dollar have agreed not to close the deal until Jan. 30, 2015, unless the Federal Trade Commission (FTC) completes its review and terminates the waiting period at an earlier date.
Meanwhile, rival Family Dollar suitor Dollar General Corp. has announced that it has extended its tender offer to acquire all outstanding shares of Family Dollar for $80 per share in cash to Jan. 30, 2015. The tender offer had been set to expire on December 31.
"Dollar General remains committed to the proposed acquisition of Family Dollar and will continue to cooperate with the Federal Trade Commission (FTC) to obtain antitrust regulatory clearance for the transaction," the Goodlettsville, Tenn.-based discount retailer said.
Family Dollar's board has recommended that shareholders reject Dollar General's offer and support of the transaction with Chesapeake, Va.-based Dollar Tree, which made a $74.50-per-share cash-and-stock offer in July.
The combination of Family Dollar and Dollar Tree--the No. 2 and No. 3 dollar store chains--would leapfrog Dollar General in number of stores to become the largest. Dollar General has more than 11,500 stores in 40 states; Family Dollar has more than 8,000 stores in 46 states; and Dollar Tree has more than 5,200 stores in 48 states.
Dollar Tree operates "fixed-price point stores, selling everything for $1 or less," while Family Dollar operates "multi-price point stores providing value-conscious consumers with a selection of competitively priced merchandise in convenient neighborhood stores," the companies said when they announced the $8.5 billion merger agreement in late July. "Dollar Tree's assortment consists of a balance between consumable merchandise and variety/seasonal merchandise. Family Dollar's assortment consists primarily of consumable merchandise and home products."
Dollar General describes itself as "offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares and seasonal items at low everyday prices in convenient neighborhood locations."
Both Dollar General and Family Dollar have added tobacco, alcohol and more grocery in recent years.
As part of a deal with Family Dollar, Dollar General would be willing to divest up to 1,500 stores if required by the FTC. But it has refused to agree to a "hell-or-high-water" commitment, as has Dollar Tree, to divest as many stores as necessary to get the deal approved. Dollar Tree said it believes the FTC may require divestitures far in excess of the 1,500 stores that Dollar General has offered to divest in its tender offer for Family Dollar--as many as 3,000.
And it said that Dollar General is an extremely close competitor to Family Dollar, far closer than Dollar Tree. The Dollar General bid may fail because the scope of the divestiture leads to a loss of value, Dollar Tree said.
Even if Dollar General is able to negotiate an acceptable divestiture number, Dollar General may be unable to find a buyer or buyers who are acceptable to the FTC. And the FTC may be unwilling to accept such a large and complicated divestiture, and may simply seek to block the Dollar General bid entirely, said Dollar Tree.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.