Boston, MA 08/20/2014 (wallstreetpr) – The race for buying Family Dollar Stores, Inc. (NYSE:FDO) is getting fierce as Dollar General Corp. (NYSE:DG) has raised its bid for Family Dollar Stores. Dollar Tree, Inc. (NASDAQ:DLTR) is also in the race to buy the rival store chain. Dollar General had offered a bid that stands at 29.4% premium over the closing price of Family Dollar when it announced the Dollar Tree’s merger last month.
The details
Dollar General has raised the bid to acquire Family Dollar to $8.95 billion. Dollar Tree offered a bid price of $8.5 billion on July 28, 2014. It is the initiation of a bidding war where the major companies will not give up their will to buy Family Dollar easily. Dollar General Offer price stands at $78.50 cash per share compared to $74.50 cash-and-stock bid of Dollar Tree. Dollar General is also ready to pay $305 million as a breakup fee. It is the amount that Family Dollar is required to pay in case it terminates its existing agreement with the firm Dollar Tree.
The benefits
Dollar General is confident of addressing any potential antitrust issues that arise during the deal. It is ready to divest around 700 of its retail stores to acquire the necessary approvals. The proposed offer will give Family Dollar an increased enterprise value of $9.7 billion. It would result in the synergies of around $550 million to $600 million per year for Dollar General after three years of the deal. Dollar General has got more than 11,000 stores spread in 40 states. The new deal will allow Dollar General to become the dominant retail player in the US. It will own around 20,000 stores spread in 46 states.
If Family Dollar merges with Dollar Tree, the new entity will take the place of Dollar General that currently holds the top spot in the United States. Family Dollar Stores, Inc. (NYSE:FDO) has said that it will review the Dollar General’s offer.
