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.
A year after union officials alleged Fyffes abused workers on plantations in Central America - and called on the produce giant to be kicked out of the Ethical Trading Initiative forum - the company is...
Much of the chatter about where 3G Capital could look next has centred on packaged food - but might the private-equity fund be about to extend its foodservice empire?...
Headlines that Mead Johnson's board has backed Reckitt Benckiser's takeover bid will no doubt overshadow the other news on the group this week – that it is facing a US lawsuit from a “whistle blower” ...
US snack maker Snyder's-Lance has invested in local natural and organic food specialist Natural Foodworks Group. ...
Kantar Worldpanel issued its monthly supermarket share data in the UK this morning - and the numbers showed a change in the identity of the country's top five food retailers....
- Does Kraft Heinz want to swallow Unilever whole?
- Focus: Nestle CEO plan to balance sales, earnings
- Comment: Meal kits in US - don't believe the hype
- Will Kellogg's DSD exit help it grow in US snacks?
- Is Mondelez's margin target hurting sales?
- Nestle plans restructuring as 2016 profit misses
- Kraft Heinz pursuing Unilever in takeover move
- General Mills issues profit warning
- Kraft Heinz returns to organic growth, ups margins
- Kraft Heinz pulls Unilever bid