Family Dollar Rejects Dollar General's Buyout Offer... Again

Family Dollar said in a statement the merger with Dollar General probably wouldn't pass muster with the Federal Trade Commission.
Posted at 8:24 PM, Sep 05, 2014

There's something to be said about trust issues: they don't work in relationships and they surely don't work in business transactions. 

Family Dollar pretty much dissed Dollar General's second attempt at buying out the company Friday, saying in an announcement its merger with Dollar Tree was more attractive. And there's another key term to this dollar-store-transaction triangle. The A-word.

BLOOMBERG: "... antitrust regulatory considerations ..." 

FOX BUSINESS: "... antitrust concerns ..."

CNBC: "... antitrust risks ..." 

The brief history of Dollar General and Dollar Tree courting Family Dollar is closely tied to antitrust and regulatory issues with the Federal Trade Commission. 

This whole bidding war between Dollar General and Dollar Tree began in July when Family Dollar's largest shareholder — and billionaire and activist investor — Carl Icahn pushed to sell the struggling dollar store chain. 

Dollar Tree offered up $8.5 billion, or $74.50 a share, to acquire Family Dollar. That acquisition would make the combined companies larger than the market leader Dollar General. 

Dollar General turned around and offered $78.50 a share in August, which was rejected, then upped the offer to $9.1 billion, or $80 a share just this week. That deal also included a $500 million reverse termination fee incase the merger didn't go through and a promise to divest, or get rid of, up to 1,500 stores

But that wasn't enough for Family Dollar and presumably the FTC: 

"Family Dollar and its board of directors in the belief that the Federal Trade Commission will actually argue it needs to divest thousands of stores." 

Family Dollar explained in a statement: "Far more than 1,500 Family Dollar stores are in zones where pricing is based solely on the presence of local Dollar General stores ... The FTC will take the position that Family Dollar’s pricing policies would immediately lead to higher prices in thousands of locations if Dollar General were no longer an independent competitor."

That's a big no-no under anti-trust laws and exactly what Family Dollar meant in saying their merger with Dollar General probably wouldn't close after the FTC's review process. 

But it's not quite over for Dollar General. The company is still "committed to acquiring" Family Dollar. 

Dollar General has said the company could take its offer directly to shareholders if rejected, but the company hasn't said if it will follow through with that plan. 

This video includes images from Getty Images.