Dollar General Starts Tender Offer For Family Dollar At $80/Shr

(RTTNews) - Discount retailer Dollar General Corp. (DG) Wednesday said it has begun a tender offer to acquire all outstanding shares of Family Dollar Stores, Inc. (FDO) for $80 per share in cash.

Dollar General said the current offer is better than the $74.50 per share cash / stock offer announced by Dollar Tree, Inc. (DLTR) in July.

It was on July 28, that Dollar Tree agreed to acquire Matthews, North Carolina-based Family Dollar Stores for $74.50 per share in a cash and stock deal valued at $9.2 billion. On August 18, Dollar General made a superior all-cash proposal of $78.50 per share or $9.7 billion to thwart the Dollar Tree bid.

On August 21, Family Dollar said its board unanimously rejected the non-binding proposal made by Dollar General on the basis of antitrust regulatory considerations. Family Dollar's board unanimously reaffirmed its recommendation in support of the merger agreement with Dollar Tree.

Last week, Dollar General sweetened its offer by $1.50 to $80.00 per share, and also raised the number of stores it was willing to divest if ordered by the Federal Trade Commission or FTC.

Dollar General stated that its offer represents a premium of 31.9 percent over the closing price of $60.66 for Family Dollar stock on the day prior to the announcement by Dollar Tree.

Dollar General said last Friday that it remains committed to acquiring Family Dollar and was currently evaluating its next steps. The statement from Dollar General was in response to the decision by Family Dollar's board to reject Dollar General's sweetened offer. At that time, Family Dollar reaffirmed its recommendation in support of the deal with Dollar Tree.

Dollar General also said it will promptly file for clearance under the Hart-Scott-Rodino, or HSR Act, which will allow the company to begin the antitrust approval process with the FTC.

Dollar Tree and Family Dollar Tuesday said they have each received a request for additional information, or second request, from the FTC in connection with Dollar Tree's pending acquisition of Family Dollar.

The offer by Dollar General is scheduled to expire at 5:00 p.m., New York City time, on October 8, 2014, unless the offer is extended.

Dollar General noted that as part of a definitive merger agreement with Family Dollar, it will divest up to 1,500 stores if required by the FTC, and also pay Family Dollar a $500 million reverse break-up fee if the transaction did not close for reasons related to antitrust approvals.

Further, Dollar General said its offer is not conditioned upon any financing arrangements, as it has has received written financing commitments from Goldman, Sachs & Co. and Citigroup Global Markets Inc.

Goldman, Sachs & Co. is acting as financial advisor to Dollar General. KKR Capital Markets and MCS Capital Markets are advising the company on the financing. Simpson Thacher & Bartlett LLP is acting as its legal counsel.

DG closed Tuesday's regular trading at $63.42 on the NYSE.

FDO ended at $78.70, down 0.15 percent.