Discount chain Family Dollar rejected a $9.7 billion takeover bid by larger rival Dollar General Thursday, saying the tie-up could run afoul of US anti-monopoly rules. Dollar General launched a bidding war Monday for Family Dollar Stores, trumping a $9.2 billion Dollar Tree merger deal agreed just weeks ago But Family Dollar's board said it judged that, "after consultation with its financial and legal advisors who have conducted an extensive antitrust analysis," the higher bid would not have been completed on the basis that Dollar General had proposed.
"Accordingly, our board rejects Dollar General's proposal and reaffirms its support for the pending merger with Dollar Tree," said Family Dollar chairman and chief executive Howard Levine. Ed Garden, co-founder of major Family Dollar shareholder Train Asset Management, backed the decision despite the lower value of the Dollar Tree offer.
"The CEO of Dollar General said he believes that antitrust is not a risk but did not put forth a proposal that eliminates regulatory risk for Family Dollar shareholders. Given the significant antitrust issues involved with Dollar General's proposal, we will not jeopardise the Dollar Tree deal," he said in a statement. A Dollar General-Family Dollar combination would have nearly 20,000 stores in 46 states and sales of more than $28 billion.
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