Family Dollar continues to insist that its rejection of Dollar General’s $80 a share all-cash offer is based on antitrust considerations. The company also said that its $74.50 cash-and-stock deal with Dollar Tree allows Family Dollar’s board to enter negotiations with an unsolicited bidder, provided that the board determines that failing to do so would run afoul of its fiduciary responsibilities and that the written proposal would be not only financially superior, but also “reasonably likely to be completed on the terms proposed.”
READ ALSO: Dollar General Turns Up the Heat on Family Dollar
Family Dollar’s chairman and CEO, Howard R. Levine, 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.
Shareholders may disagree, but they won’t have activist investor Carl Icahn’s help getting more money for their shares. Icahn sold the last of his Family Dollar shares sometime in August, according to an exclusive report from Reuters. Icahn pocketed a profit of about $200 million on the investment he first made in June. At that time Icahn owned 9.4% of Family Dollar’s shares and he reduced his stake to 3.61% by the end of July.
Another director of Family Dollar said, “Dollar Tree has taken the antitrust risk off the table by committing to divest as many stores as necessary to obtain antitrust clearance.” Dollar General had agreed to divest up to 1,500 of its more than 11,500 stores if required in order to meet antitrust requirements.
Family Dollar said in its press release this morning that the Federal Trade Commission is already “deeply involved” in reviewing the merger with Dollar Tree. The company also responded in detail to all the points in Dollar General’s second offer letter sent this past Tuesday.
Now it remains to be seen if Dollar General will make good on its stated intention of “consider[ing] taking our persuasive and superior proposal directly to your shareholders.” That somewhat mushily worded intention may yet mean more money for current shareholders if they are willing to take a risk with Dollar General’s offer. But don’t bet on a hostile takeover attempt, and if one comes, don’t bet on it winning.
READ ALSO: Dollar General Turns Up the Heat on Family Dollar
Family Dollar shares traded down about 0.5% in Friday’s premarket session, at $79.70 in a 52-week range of $55.64 to $80.97. Investors appear still to hold hope that Dollar General will save the day.
Dollar General’s shares were down 1.5%, at $63.50 in a 52-week range of $53.00 to $65.99.
Dollar Tree’s shares were down 0.9%, at $54.51 in a 52-week range of $49.59 to $60.19.
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