Why Dollar General Corp. (DG)’s Hostile Family Dollar Stores, Inc. (FDO) Bid Is Almost Meaningless

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Why Dollar General Corp. (NYSE:DG)’s hostile takeover bid for Family Dollar Stores, Inc. (NYSE:FDO) is almost meaningless was discussed by David Faber in a “Squawk Road Map” segment on CNBC.

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The hostile bid from Dollar General Corp. (NYSE:DG) comes as Family Dollar Stores, Inc. (NYSE:FDO) is proceeding with acquisition talks with Dollar Tree, Inc. (NASDAQ:DLTR) which is offering less than Dollar General Corp.

“Dollar General Corp. (NYSE:DG) has gone hostile in its bid to buy rival Family Dollar Stores, Inc. (NYSE:FDO). [Dollar General Corp. is] announcing this morning [that]it is taking its $80 per share offer directly to shareholders via a tender offer,” Faber reports.

Faber noted that the hostile bid is almost meaningless. He said that while shareholders can tender into the Dollar General Corp. offer which will expire on October 8, the offer cannot be closed without antitrust regulators approving the offer. A lot of shareholders will potentially tender into the Dollar General Corp. offer but the Dollar Tree, Inc. shareholder approval vote will also come before the tender offer is approved by regulators, Faber added.

Nonetheless, this does give Dollar General Corp. the opportunity to dialogue with the Federal Trade Commission (FTC) about what they need to do in terms of divestitures if their company merges with Family Dollar Stores, Inc., Faber said.

Faber noted early in the report that Family Dollar Stores, Inc. (NYSE:FDO) has admitted that it is going through with talks with Dollar Tree, Inc. (NASDAQ:DLTR) to be bought at $74.50 per share, below the $80 per share Dollar General Corp. (NYSE:DG) is offering to buy the rival company.

However, the CNBC host said that key to the Dollar Tree, Inc. bid for Family Dollar Stores, Inc. is the issue of passing antitrust regulators. For a merger between any of the companies to be finalized, it has to be approved by the FTC which looks at whether a merger would violate antitrust regulation among other things.

Dollar General Corp. (NYSE:DG) investors includes Glenview Capital managed by Larry Robbins. The hedge fund reported about 8.22 million shares in the company by the end of the first half of the year.

Family Dollar Stores, Inc. (NYSE:FDO) shareholders includes Nelson Peltz’s Trian Partners which reported about 8.37 million shares in the company by the end of the first half of the year.

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