Family Dollar Stiffarms Dollar General $9.7B Buyout Bid

Dollar General has not said whether Family Dollar locations would be rebranded under a buyout. Credit: Dustin Peck Photography via Family Dollar

Family Dollar Stores says thanks, but no thanks to a $9.7 billion buyout bid from larger rival Dollar General. Family Dollar is citing antitrust concerns for its rejection.

If Charlotte-based Family Dollar and Goodlettsville-based Dollar General link up, they’d have 20,000 small-box stores. To resolve potential monopoly violations, Dollar General offered to sell 700 locations. But a Family Dollar statement says that still doesn’t “eliminate regulatory risk.”

“We will not jeopardize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations,” said Ed Garden, co-founder of Trian Fund Management, a large Family Dollar shareholder.

There’s also a tone of hostility in the competing news releases. Family Dollar CEO Howard Levine says Dollar General is spreading “blatant mischaracterizations” of the negotiation process.

A letter dated August 20 from Dollar General CEO Rick Dreiling lays out what’s described as a “puzzling” process in which Dollar General was kept in the dark after initial merger discussions:

“Nonetheless, we have presented you with a superior proposal for your shareholders (although perhaps not for Mr. Levine personally), and we urge you to evaluate our proposal on its merits considering this full set of facts and in keeping with your obligation to consider first and foremost the best interests of your shareholders.”

Still, Family Dollar board is reaffirming a less lucrative merger with Dollar Tree. Activist investor Carl Icahn, who has held sizeable stakes in Family Dollar, suggests Levine is only sticking with the original deal because he could stay on as an executive.