Family Dollar Passes On Dollar General Bid

Aug 22 2014 | 6:58am ET

Family Dollar Stores has rejected an $8.9 billion offer from its biggest competitor, saying that a tie-up between the largest and second-largest dollar stores in the U.S. would run into antitrust trouble.

Family Dollar had previously accepted an $8.5 billion offer from another rival, Dollar Tree. It said that the larger offer from Dollar General did not do enough to ensure that federal regulators would not stop the deal.

The rejection comes just 12 hours after Dollar General accused Family Dollar of misleading it about its sale process, alleging that Family Dollar CEO Howard Levine prefers the Dollar Tree offer because it will allow him to keep his job. It also sets up the prospect of a proxy fight.

Dollar General said it was “disappointed” by the decision. Also sure to be disappointed is Carl Icahn, who bought a 9.4% stake in Family Dollar six weeks before it announced the Dollar Tree deal, pushing for a sale to Dollar General. This week, Icahn blasted Family Dollar’s effort “to chill a competing bid for Dollar General... even though the Dollar General bid would enhance the value of Family Dollar stock.”

Less dissatisfied, apparently, is Trian Fund Management. The hedge fund has owned Family Dollar stock for years, and its representative on the board voted to reject the Dollar General offer.

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