Family Dollar has become the latest business to be targeted for a hostile takeover bid.
Bloomberg is reporting that Dollar General has delivered its $9.1 billion bid to shareholders at $80 per share of Family Dollar stock in an apparent hostile takeover bid. A similar deal was offered to Family Dollar last week, but the proposal was flatly rejected. The takeover target has accepted a lower bid from Dollar Tree Inc. instead, saying that deal will more easily gain regulatory clearance.
The hostile offer ratchets up a three-way takeover battle that has grown increasingly rancorous. Dollar General has suggested that Family Dollar would prefer the Dollar Tree transaction in part because it includes a management role for Chief Executive Officer Howard Levine. Family Dollar, meanwhile, has said that Dollar General hasn't sufficiently dealt with antitrust concerns for a merger that would create a massive retail chain with almost 20,000 locations.
Letting shareholders vote on the bid will put those questions to the test, said Erik Gordon, a professor at the University of Michigan's Ross School of Business.
"They have a good chance of winning a hostile takeover battle unless Dollar Tree matches their offer," he said. "Family Dollar's institutional stockholders are less concerned about the antitrust risk in the Dollar General offer than Family Dollar's management wants them to be."
The Christian Science Monitor is reporting Dollar General is still adamant about acquiring Family Dollar.
"Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree," Rick Dreiling, chairman and chief executive of Dollar General, said in a statement. "By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer."
Dollar General originally offered $9.7 billion to buy Family Dollar on August 18, but Family Dollar rejected the deal because of antitrust concerns. On Sept. 2, Dollar General again offered to buy Family Dollar for $9.1 billion, and said that it would sell off 1,500 stores to allay those concerns. Again, Family Dollar said no. Dollar General is now playing its last card, the hostile takeover. Dollar General is attempting to purchase enough Family Dollar stock, either pubicly on the open market or privately through an agreement with the company itself.
This can pose a problem for Dollar General. In this scenario, Family Dollar does not have to disclose any information that it isn't already publically known. Dollar General could successfully take over Family Dollar, plus any debt or technical issues Family Dollar has and never disclosed.
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