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Dollar General Climbs Atop Dollar Tree

NEW YORK (The Deal) -- Dollar General (DG - Get Report)  has trumped Dollar Tree (DLTR - Get Report) 's bid to acquire Family Dollar Stores (FDO) by $4 per share on Monday, offering $78.50 per share in cash, giving the target a market capitalization of almost $8.95 billion.

Goodlettsville, Tenn.-based Dollar General made the offer to Family Dollar's board in a letter disclosed Monday.

The competing bid values the Charlotte, N.C.-based discounter at nearly $9.6 billion including cash and debt. Dollar General said in its announcement that its offer gave Family Dollar a $9.7 billion valuation.

Dollar General said that combining the two retailers would create a powerhouse with sales of over $28 billion and a chain of nearly 20,000 stores in 46 states, solidifying the acquirer's position as the largest dollar-themed retailer. It would also, importantly, generate cost-saving synergies of $550 million to $600 million per year after three years.

Dollar General said it can address any potential antitrust issues as a result of the transaction by divesting up to 700 stores to get approval.

Goldman Sachs (GS - Get Report)  and Citigroup Global Markets (C - Get Report)  have agreed to provide committed financing for the transaction, including the $305 million termination fee payable to Dollar Tree if Dollar General were to succeed with its own offer.

Dollar Tree's offer, which included a combination of stock and cash, valued Family Dollar at $74.50 per share, equating to a market cap of about $8.49 billion when taking into account the nearly 114 million shares outstanding.

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FDO $0.00 0.00%
C $44.66 -2.00%
DG $84.00 1.29%
DLTR $80.61 0.00%
GS $160.07 -1.88%


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