Family Dollar Stores, Inc. (NYSE:FDO)’s rejection of the $8.9 billion takeover offer made by Dollar General Corp. (NYSE:DG), in favor of the $8.5 billion one made earlier by Dollar Tree, Inc. (NASDAQ:DLTR) is likely to initiate a bidding war for the discount retailer. According to Kleinberg Kaplan attorney Christopher Davis on Bloomberg today however, Family Dollar Stores, Inc. (NYSE:FDO) may be setting themselves up by completely disregarding price in the matter.
“Greater certainty of consummation, which is one of the things a board is entitled to look at, and should be looking at to protect its shareholders, but they’ve also set themselves up, because they’ve made this not at all about price, they’ve made it about antitrust risk. So if Dollar General comes back and winds up giving them a reasonable offer, which may be something short of a ‘hell or high water, we will sell anything, we should scare Dollar General’, you don’t want to put that kind of power in the hands of a regulator,” Davis said.
Davis added that if the board does decide to go ahead and accept the Dollar General Corp. (NYSE:DG) proposal that it will put Dollar Tree, Inc. (NASDAQ:DLTR) in a bind, given that the Dollar General Corp. (NYSE:DG) bid is widely considered the better of the two offers financially.
Family Dollar Stores, Inc. (NYSE:FDO) rejected the offer made by Dollar General Corp. (NYSE:DG) on the grounds that the latter’s willingness to sell as many as 700 stores to make the deal happen would not be enough to please regulators. A Family Dollar Stores, Inc. (NYSE:FDO)/Dollar General Corp. (NYSE:DG) merger would combine the two largest dollar store chains in the U.S and result in nearly 20,000 stores.
Dollar General Corp. (NYSE:DG) however sees their competition as being not only from within the dollar store industry, but also from other big-box retailers like Wal-Mart Stores, Inc. (NYSE:WMT), Walgreen Company (NYSE:WAG), and Target Corporation (NYSE:TGT).
Israel Englander’s Millenium Management is one of the most prominent Family Dollar Stores, Inc. (NYSE:FDO) investors with 588,226 shares in the company as of their most recent 13F filing.