Updated from 2:25 p.m. EDT with analysts' comments

NEW YORK (TheStreet) -- Dollar General (DG) remains a better buyer of Family Dollar (FDO) according to investors and analysts, even after the latter said on Monday it would merge with Dollar Tree (DLTR) in a $8.5 billion cash and stock deal. But it will take some major fireworks on Wall Street to keep a bumper dollar store trade going.

Family Dollar CEO Howard Levine, the son of company founder Leon Levine, launched a strategic review in the winter of 2013 and after considering a number of bidders and alternatives for the struggling retailer, he began negotiating a merger with Dollar Tree in March. Family Dollar's brand will survive under Dollar Tree with Levine at its head, and Monday's deal is expected to generate large cost savings, helping the company complete a turnaround it began last year.

Both companies' boards of directors and, crucially, hedge fund Trian Management, a long-time investor in Family Dollar that gained a seat on the company's board in 2011, approved the merger. While Carl Icahn, Family Dollar's largest shareholder with an over 9% stake wasn't privy to the company's sale process, on Monday he voiced some support for the deal.

Read More: Dollar Tree Buys Family Dollar for $8.5 Billion in Cash and Stock

"This is a big win for all shareholders of Family Dollar and yet another validation of the activist investment philosophy," Icahn said in a statement. Nonetheless, he continued to press for an alternative deal, noting that other buyers may achieve greater cost cuts. He is "hopeful" that Dollar Tree's offer draws a competing bid.

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