Bloomberg: Wal-Mart Unlikely To Float Rival Bid For Family Dollar

(RTTNews) - All eyes are on retail giant Wal-Mart Stores, Inc. (WMT) after discount retailer Dollar General Corp. (DG) earlier on Monday made a superior all-cash proposal of $78.50 per share or $9.7 billion to acquire rival Family Dollar Stores, Inc. (FDO).

The rival bid seeks to thwart an agreed $74.50 per share or $9.2 billion cash and stock deal for Dollar Tree, Inc. (DLTR) to acquire Family Dollar Stores that was agreed up on in late July.

However, Walmart is not expected to jump the bandwagon to make a rival bid for Family Dollar Stores as it does not traditionally buy rival retailers in the U.S., according to a Bloomberg report.

Walmart is said to have conducted an internal review on the possibilities of bidding, but determined that Family Dollar wouldn't be a good fit with its smaller-format stores.

Meanwhile, a consolidation of the dollar stores is expected to increase competition for Wamart which is already reeling under six straight quarters of poor results and stagnant comparable sales growth. It also cut profit forecast for the full year last week, citing projected higher health-care costs and e-commerce spending.

The proposed deal will enable Dollar General to boost and maintain its role as the largest dollar-store chain, with the deal expected to create a combined entity having 20,000 stores that will generate in excess of $28 billion in annual revenues. The combined Dollar Tree-Family Dollar entity will have more than 13,000 stores in 48 states and five Canadian Provinces, generating in excess of $18 billion in annual revenues.

A win for either Dollar General of Dollar Tree would be a loss for Walmart as the discount stores are expected to raise competition with more stores closer to any Wal-Mart store.

WMT closed Monday's regular trading session at $74.49, up $0.59 or 0.80% on a volume of 4.02 million shares, and FDO closed at $79.81, up $3.75 or 4.93% on a volume of 20.05 million shares.