NEW YORK (The Deal) -- Dollar General (DG) on Wednesday said it would launch a tender offer of $80 per share for Family Dollar Stores (FDO) , going hostile with a $9.1 billion offer that was already rejected by the target's board.
In a response, Family Dollar said it would review the bid and make a recommendation to shareholders, noting it was the same offer that Dollar General previously made. The tender offer expires Oct. 8. Dollar General and Family Dollar declined comment.
The hostile bid is the latest salvo in the battle over who will control the Charlotte, N.C.-based discounter largely concentrated in the Southeastern U.S.
Dollar Tree (DLTR) in July agreed to buy Family Dollar for $74.50 per share, in a deal valued at $9.2 billion in cash, stock and assumed debt. Dollar General made its $80 per share bid in August, saying its offer valued Family Dollar at $9.7 billion.
Family Dollar on Sept. 5 rejected Goodlettsville, Tenn.-based Dollar General's offer, which included a reverse breakup fee of $500 million, if the deal didn't meet regulatory standards and a commitment to divest 700 to 1,500 stores. Family Dollar then revised its $74.50 per share deal with Chesapeake Va.-based Dollar Tree to include an agreement to divest as many stores "as necessary or advisable" to gain antitrust clearance.
Revising this aspect of the deal signalled to Dollar General that it needed to do the same, despite its otherwise superior offer. But a source familiar with Dollar General said that it feared it would loose too much leverage with the Federal Trade Commission in a review of the deal if it made such a concession.
But the source said the aim was for Dollar General to launch a dialogue with the FTC to find out exactly what issues the agency would have and how many stores it would require a combined Family Dollar and Dollar General to unload. The source termed it a "fact-finding mission."