The given reason for sticking with the lower offer is “antitrust regulatory considerations.” A special committee of Family Dollar’s board comprised of four independent directors found that the Dollar General bid did not meet a requirement that a competing bid that can reasonably be expected to result in a superior bid is also “reasonably likely to be completed on the terms proposed.” In other words, Family Dollar believes that regulators will kill the Dollar General deal, so why waste any more time.
What’s more fun, though, is to read what Dollar General had to say about its meetings with Family Dollar and that company’s chairman and CEO Howard Levine:
[O]n more than one occasion at such meetings, Howard Levine expressed his own interest in the social issues of a combination, including, among other things, his desire to be chief executive officer of the combined companies. We cannot help but question whether Dollar General’s failure to embrace such requests by Mr. Levine weighed into Family Dollar’s decision to pursue an agreement with Dollar Tree.
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Levine responded in Family Dollar’s rejection announcement Thursday morning:
I would also like to note that Dollar General’s letter, sent late last night, contained blatant mischaracterizations and did nothing to address the antitrust issues in Dollar General’s proposal.
Activist investor Carl Icahn told The Wall Street Journal earlier this week that Family Dollar preferred the Dollar Tree offer because it preserved Levine’s job. The rejection of Dollar General’s all-cash offer may bring a sharp reaction from Icahn. Family Dollar has now indicated that no bid that does not include a sinecure for Levine will be acceptable. Icahn should have something to say about that.
Family Dollar’s stock traded down about 0.2% in Thursday’s premarket session, at $79.67 in a 52-week range of $55.64 to $80.10.
Dollar Tree’s shares were down 0.9%, at $54.50 in a 52-week range of $49.59 to $60.19.
Dollar General’s stock traded down about 1.4%, at $62.90 in a 52-week range of $53.00 to $65.99.
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