Dollar General offered $9.7 billion, or $78.50 a share, for Family Dollar. Dollar Tree had previously offered $8.5 billion, or $74.50 a share, for the dollar store retailer in July.
The merged company would have nearly 20,000 stores in 46 U.S. states. Dollar General said it expects revenue to reach $28 billion and expects the deal to generate synergies of $550 million to $600 million three years after the deal closes should Family Dollar accept it. Dollar General also expects the merger to lead to double-digit adjusted earnings per share growth in the low double digits in the first full-year following the deal, less the costs tied to the merger.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.
Family Dollar stock was up 4.52% to $79.50 at 9:47 a.m. More than 9.1 million shares had changed hands, compared to the average volume of 2,732,250.
Separately, TheStreet Ratings team rates FAMILY DOLLAR STORES as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FAMILY DOLLAR STORES (FDO) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."