Blog: Dollar General in rival bid for Family Dollar
Katy Askew | 19 August 2014
Dollar General has moved to derail Dollar Tree's proposed acquisition of Family Dollar Stores by trumping the US$9.2bn offer already on the table with a competing $9.7bn bid.
Dollar General is already the largest of the three retailers and - should it ultimately emerge as the winning bidder - the group would further extend its lead in the US dollar store sector. Dollar General and Family Dollar would generate about US$28bn in annual revenues - more than the $18bn in annualised revenues that would be created by a Family Dollar-Dollar Tree combination.
In many ways, Dollar General and Family Dollar are a more logical fit. Both groups are multi-priced discount retailers that are more heavily reliant on sales of consumables. In contrast, Dollar Tree sells all its products for $1 and is more geared towards the sale of non-consumable goods.
Some FMCG groups may fear that the emergence of a stronger and potentially more demanding customer with greater purchasing power - and therefore more leverage in pricing negotiations - could come as a blow for suppliers.
However, dollar stores have proven an important growth avenue for food companies. As just-food argued in a recent analysis of a possible Family Dollar sale, a larger player could present some significant opportunities for branded and private-label players alike.
The sector witnessed stellar expansion in the years following the 2008 economic crash and has done decent job in holding onto consumers it won over in the downturn. US shopping patterns witnessed a meteoric shift and a growing number of consumers became willing to shop around for groceries.
With the US economy moving to recovery mode, the factors propelling the growth of the channel have abated somewhat. Dollar stores are no longer benefiting from increased sector-wide revenues - meaning new ways of expanding must be found. Industry pundits have argued a combination of Dollar General and Family Dollar would address Dollar General's perceived under-performance and unlock growth for the discount retailer.
French politicians have passed legislation that bans large stores from throwing away unsold food in a bid to tackle waste....
The make-up of the ingredients in baby food in the US is under some scrutiny, with Campbell Soup Co. and Nestle attracting criticism from consumer watchdogs....
UK cash-and-carry and convenience retailer Booker Group has struck a deal to buy the Londis and Budgens symbol retail chains from Ireland's Musgrave Group - and emphasised the changing retail landscap...
US efforts to liberalise international trade faced something of a roller coaster ride this week, as the Senate first voted down Barack Obama's proposals only to reach a compromise that would give the ...
- Why Arla upbeat about LatAm prospects
- M&A Watch - Could Cloetta be takeover target?
- Comment: Can Applegate retain trust under Hormel?
- Sweets & Snacks Expo: just-food's pick
- Why "added-value" is key in LatAm yoghurt
- Yildiz eyeing further deals - reports
- Weetabix gets new private-equity investor
- PAI, Pamplona "eyeing Bakkavor stake"
- FrieslandCampina ends Bongrain German tie-up
- Food industry news of week: GMOs, Arla, Mondelez
- Successful New Product Development Strategies in the Food, Drinks and Personal Care Market
- ALDI 2015: Radically transforming Anglo Saxon grocery markets
- The Future of the Ice Cream Market in the United Kingdom to 2019
- Consumer Foodservice in Indonesia
- Marks & Spencer (Asia Pacific) Ltd in Retailing (Hong Kong, China)