Family Dollar rejects Dollar Generals latest bid
Family Dollar Stores Inc., Matthews, N.C., announced that its board of directors unanimously rejected the revised nonbinding proposal made Sept. 2 by Dollar General Corp., Goodlettsville, Tenn., on the basis of antitrust regulatory considerations. Family Dollar’s merger agreement with Dollar Tree contains a customary provision that permits Family Dollar to enter into discussions and share information with any competing bidder, but only if the board is able to determine that failure to do so would be inconsistent with its fiduciary duties and that the unsolicited written proposal from the competing bidder would be reasonably expected to lead to a proposal that is not only financially superior, but also “reasonably likely to be completed on the terms proposed.
“Our board of directors, with the assistance of outside advisors and consultants, reviewed all aspects of Dollar General’s revised proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed,” said Howard R. Levine , chairman and CEO of Family Dollar. “There is a very real and material risk that the transaction proposed by Dollar General would fail to close after a lengthy and disruptive review process. Accordingly, our board has rejected Dollar General’s revised proposal and reaffirmed its support of the transaction with Dollar Tree, which delivers attractive value in the form of immediate upfront cash and upside participation in a combined Dollar Tree-Family Dollar entity, as well as closing certainty.”
The board’s unanimous determination to reject Dollar General’s revised proposal and to accept Dollar Tree’s commitment to divest as many stores as required for antitrust approval follows the unanimous recommendation of a committee of four non-management independent directors that has been overseeing Family Dollar's consideration and exploration of strategic alternatives since January 2014. This committee consists of Glenn A. Eisenberg, Ed Garden, George R. Mahoney Jr. and Harvey Morgan.
“We are focused on delivering to Family Dollar shareholders the highest value with certainty, and the Dollar Tree transaction does just that,” Garden said. “Dollar Tree has taken the antitrust risk off the table by committing to divest as many stores as necessary to obtain antitrust clearance. We remain fully committed to the Dollar Tree transaction.
“Dollar General’s revised proposal, on the other hand, does not eliminate regulatory risk for Family Dollar shareholders,” he continued. “Dollar General has repeatedly stated that antitrust is not a risk, yet they have put forth proposals that require Family Dollar shareholders to bear the ultimate risk. Receiving a reverse breakup fee with an after-tax value of less than $3 a share does virtually nothing to compensate the Family Dollar shareholders for assuming that risk.”