Dollar General Enters Bidding War For Family Dollar

Dollar General is already the largest small-box retailer in the U.S. and has been expanding into new states in recent years. Credit: Dollar General

As rumored last week, Goodlettsville-based Dollar General is making a competing bid to buy Family Dollar Stores. According to a news release from the company, Dollar General has made a $9.7 billion all-cash counter-bid, which tops the cash and stock offer made by Dollar Tree three weeks ago.

The deal includes a $305 million termination fee to break off the merger of Family Dollar and Dollar Tree.

“For Dollar General shareholders, the proposed combination of Dollar General and Family Dollar would be a significant strategic opportunity to create immediate and lasting shareholder value,” CEO Rick Dreiling said in statement. “For both Dollar General and Family Dollar customers, we would be able to provide better value and greater selection.

If Dollar General is successful, Dreiling says he would postpone his retirement for one year, which was originally slated to take effect at the end of May.

Dreiling said on a conference call Monday morning he’d been given the impression Family Dollar wasn’t for sale.

“Suffice it to say, for someone who was supposedly involved in a process, we were very surprised by Family Dollar’s announcement with Dollar Tree. And I’ll go one step further and say if I had thought this asset was in play, I probably wouldn’t have announcement my retirement. It’s water under the bridge, and what we’ are here to do right now is get our merger agreement with Family Dollar as we believe we have a superior proposal for its shareholders.”

Dollar General is already the largest discount retailer of its kind. Combined with Family Dollar, it would have 20,000 stores in 46 states – so many, that it has offered to sell 700 locations to avoid anti-trust regulations.

Lots of details remain to be worked out, including whether Family Dollar Stores would be rebranded as Dollar General or what would remain of the Charlotte headquarters of Family Dollar.