Family Dollar Stores, Inc. (FDO) Auctioned Between Dollar General Corp. (DG) and Dollar Tree, Inc. (DLTR)

CNBC’s David Faber reported that Family Dollar Stores, Inc. (NYSE:FDO) had rejected the second buyout bid of $80 per share (up from the last proposal of $78.5) from Dollar General Corp. (NYSE:DG). The seriousness of this offer is in question as there is another contender, Dollar Tree, Inc. (NASDAQ:DLTR), who is more committed and in a much better shape as far as the anti-trust laws are concerned to acquire Family Dollar Stores, Inc. (NYSE:FDO).

“We are focused on delivering to Family Dollar Stores, Inc. (NYSE:FDO)’s shareholders the highest value with certainty, and the Dollar Tree, Inc. (NASDAQ:DLTR) transaction does just that. Dollar Tree, Inc. (NASDAQ:DLTR) has taken the antitrust risk off the table by committing to divest as many stores as necessary to obtain anti-trust clearance. We remain fully committed on the Dollar Tree transaction”, Ed Garden, a co-founder of Trian Fund Management and a board member of Family Dollar Stores was quoted as saying.

Faber commented that such a commitment of divestment has yet to be heard from Dollar General Corp. (NYSE:DG) who only promised to go as far as divesting 1,500 stores. Faber pointed out that since there are far more than 1,500 zones in which prices are solely based on Dollar General Corp. (NYSE:DG)’s stores and thousands more where its between them and Wal-Mart Stores, Inc. (NYSE:WMT), a promise of mere 1,500 stores doesn’t suffice. In fact he believes that since the original offer of $78.5 was already economically superior, Dollar General Corp. (NYSE:DG)’s intentions are only to halt the deal with Dollar Tree, Inc. (NASDAQ:DLTR) as Family Dollar Stores, Inc. (NYSE:FDO) will be tempted to play auction between the two giant versatile store chains.

With Dollar Tree, Inc. (NASDAQ:DLTR) committed to divest as many stores as required for the anti-trust clearance the deal could close as early as by the end of November. However, Dollar Tree, Inc. (NASDAQ:DLTR) does expect a second request for additional information from the Federal Trade Commission on September 8.

Disclosure: none