Family Dollar Continues to Stiff-Arm Dollar General

WASHINGTON (The Deal) -- Family Dollar Stores (FDO)  on Friday formally rejected the revised unsolicited bid from Dollar General (DG)  on antitrust grounds and moved to make sure any regulatory issues raised by its deal to be acquired by Dollar Tree (DLTR)  are resolved as quickly as possible.

Dollar Tree and Family Dollar have amended their merger agreement to include a commitment by Dollar Tree to divest as many stores "as necessary or advisable" to obtain antitrust clearance for the previously announced cash and stock transaction. All other terms and conditions of the merger agreement remain the same as when their deal was announced July 28. Previously, the merger agreement limited the number of store divestitures Dollar Tree was obligated to accept at 500.

The merger partners said that they expect the Federal Trade Commission on Monday to issue a second request for information extending the government's antitrust investigation of their deal, but also predicted that the deal would receive FTC approval in time to close the transaction as early as the end of November. Previously, the parties had predicted the transaction will close early in 2015.

The stepped-up timeframe is aggressive, even though the parties have insisted their deal is unlikely to face major antitrust issues, simply because the combined retails chain would have 13,000 stores and the FTC will need to conduct a granular analysis to determine which locations might feature Dollar Tree and Family Dollar stores competing near each other.

By shortening the predicted timeframe for closing the deal, Dollar Tree and Family Dollar are indicating that they won't drag out discussions with the FTC in order to keep the number of spinoffs the regulators require at a bare minimum.

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