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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 - Get Report) 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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SYM TRADE IT LAST %CHG
C $52.42 0.02%
DG $72.62 0.60%
DLTR $79.68 0.81%
FDO $78.74 0.17%
GS $189.79 -1.25%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

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