The Family Dollar Stores, Inc. board of directors has unanimously rejected a revised, non-binding proposal made by Dollar General Corp. on September 2, on the basis of antitrust regulatory considerations, Family Dollar announced. According to Family Dollar, the Dollar General bid is not likely to win through regulatory scrutiny under the terms offered.
Family Dollar noted that its pre-bid 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 determines that failure to do so would be inconsistent with its fiduciary duties and that the unsolicited, written proposal from the competing bidder is not only financially superior but also reasonably likely to reach completion according to the terms offered.
Howard Levine, Family Dollar chairman, in a statement about the rejection of the Dollar General bid, said, “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. 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.”