Dollar General Sweetens Bid For Family Dollar

(RTTNews) - Discount retailer Dollar General Corp. (DG) Tuesday said it has sent a sweetened acquisition proposal to the Board of Directors of Family Dollar Stores, Inc. (FDO). Further, the company increased the number of stores it is willing to divest if ordered by the Federal Trade Commission, and agreed to pay a $500 million reverse break-up fee to Family Dollar relating to antitrust matters.

Under the terms of the revised proposal, Dollar General would increase its all-cash proposal for all outstanding shares of Family Dollar to $80.00 per share.

On July 28, Family Dollar entered into a definitive merger agreement with Dollar Tree, Inc. (DLTR), under which Dollar Tree would acquire Family Dollar for $59.60 in cash and $14.90 in Dollar Tree stock.

Later, in August, Dollar General made a superior all-cash proposal of $78.50 per share or $9.7 billion to acquire Family Dollar.

On August 21, Family Dollar's board unanimously rejected the proposal made by Dollar General on the basis of antitrust considerations, and unanimously reaffirmed its recommendation in support of the merger agreement with Dollar Tree, Inc. (DLTR).

Dollar General said today that the revised proposal provides Family Dollar's shareholders with around $640 million of additional aggregate value over Dollar Tree's offer. It represents a premium of 31.9 percent over the closing price of $60.66 for Family Dollar stock on the day prior to the Dollar Tree announcement.

Further, to provide a greater certainty of consummation to the Board of Family Dollar, Dollar General today said it increased the number of stores that it would be willing to agree to divest to 1,500, if ordered by the Federal Trade Commission. The previous commitment was for the divestiture of 700 stores.

Additionally, as further evidence of its confidence in its ability to obtain antitrust approval, Dollar General agreed to pay a $500 million reverse break-up fee to Family Dollar relating to antitrust matters.

Dollar General said it is confident that the deal would not be evaluated as a traditional grocery store merger and that, as the acquirer, Dollar General's documents and data would be more important to the FTC in its analysis than those of Family Dollar.

All other terms and conditions of the proposal remain unchanged.

DG, which closed down 0.3 percent on Friday at $63.99, is up 2.2 percent in pre-market activity.

FDO settled the previous session at $79.83 and is modestly up in pre-market trading.