Tomahawk, WI 08/19/2014 (Basicsmedia) – The bidding war for discount retailer, Family Dollar Stores, Inc. (NYSE:FDO), stores looks to be heating up after Dollar General Corp. (NYSE:DG) made its intention known by tabling $8.9 Billion cash deal for the store. Dollar General Bid price is essentially a win situation for Family Dollar Stores, Inc. (NYSE:FDO) shareholders, according to BB&T Capital Markets, Anthony Chukumba, in an interview on Bloomberg business. Dollar General’s offer remains exciting and superior as it is all cash, and is $4 above Dollar Tree, Inc. (NASDAQ:DLTR)’s made late July at 80% cash and 20% stock.
Dollar General Corp. (NYSE:DG) is looking to acquire Family Dollar as it tries to strengthen its dominance in the ever growing segment of retailers serving penny customers. Chukumba believes that Dollar General Deal for family dollar will not be bad business for Dollar Tree on the fact that they have always co-existed well, on a similar price point.
“We see this as a win, clearly for Family dollar shareholders; they are getting $4 a share more than they were for the Dollar tree offer, and they are also getting all cash. The Dollar Tree’s Offer was 80% cash and 20% stock,” said Mr. Chukumba.
Dollar Tree, Inc. (NASDAQ:DLTR) remains an outright winner should Family Dollar accept Dollar General Offer as it will be entitled to $305 million in breakup fees. Dollar General may also be forced to let go, of some of its stores in areas where regulators deem the combined entity will control a huge market share. If this is to happen, then Dollar Tree might pounce in and buy some of the stores, considerably increasing its market share.
“Regulators may look at certain markets and decide that, if assuming Dollar General Corp. (NYSE:DG) wins, they have got too much share in certain markets. So they have to sell off stores and Dollar tree can come in and buy those and frankly, without some of the headaches that It might have with trying to turn Family Dollar around,” said Bloomberg’s David Welch.