Blog: Family Dollar dismisses Dollar General offer
Dean Best | 21 August 2014
The takeover battle for Family Dollar Stores has taken another twist, with the US retailer rejecting a takeover bid from rival Dollar General and in-the-spotlight CEO Howard Levine citing anti-trust concerns.
Dollar General bid US$9.7bn for Family Dollar earlier this week, trumping a US$9.2bn offer from a third discount retailer, Dollar Tree, which was tabled last month.
However, Family Dollar dismissed Dollar General's offer, insisting an "extensive anti-trust analysis" meant it believed a deal could not be done between the two companies on the terms put forward.
"Our board of directors, with the assistance of outside advisors and consultants, has been carefully analysing the anti-trust issues in a potential combination with Dollar General since the beginning of this year," Family Dollar CEO Howard Levine said.
"Our board reviewed, with our advisors, all aspects of Dollar General's proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed. Accordingly, our board rejects Dollar General's proposal and reaffirms its support for the pending merger with Dollar Tree."
Levine also issued a firm rebuttal against claims from Dollar General that he had ignored previous overtures from its latest suitor over fears of losing his job.
Dollar General claimed a recent filing from Family Dollar detailing the bid from Dollar Tree had "failed to mention that Dollar General representatives have consistently expressed a keen interest in putting our two companies together".
The filing "also fails to mention that on more than one occasion at such meetings, Howard Levine expressed his own interest in the social issues of a combination, including, among other things, his desire to be chief executive officer of the combined companies".
That shone the spotlight firmly on Levine, with a company's fidicuiary duty to maximise shareholder value seen as a key attribute of chief exeuctive.
Levine brushed off Dollar General's claims. "I would also like to note that Dollar General’s letter, sent late last night, contained blatant mischaracterisations and did nothing to address the antitrust issues in Dollar General’s proposal," he said today.
Family Dollar's opposition to the Dollar General bid has also been supported by major shareholder Trian Fund Management, the investment vehicle run by Nelson Peltz.
"Consistent with its fiduciary duties, the company's board has sought to maximise shareholder value while considering the certainty of closing a transaction. The CEO of Dollar General said he believes that anti-trust is not a risk but did not put forth a proposal that eliminates regulatory risk for Family Dollar shareholders. Given the significant antitrust issues involved with Dollar General's proposal, we will not jeopardise the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations. We remain fully committed to the Dollar Tree transaction."
Will Dollar General, which has pledged to offload up to 700 stores from the combined business, return to the table with revised offer?
Either way, FMCG manufacturers operating in the US are set to face, on paper, a stronger customer with which to do business, following other deals across the US grocery sector, including Albertsons' takeover of Safeway and Kroger's purchase of Harris Teeter.
The UK's competition regulator has given the all-clear to Hain Celestial's bid to buy UK food and beverage group Orchard House Foods, nine months after the US group announced the deal....
Hershey made an unusual announcement today (20 September), sharing its own sales data for the last four weeks to assuage any possible investor concern over figures released by Nielsen....
As the UK starts to ponder what kind of a relationship it wants with the European Union post-Brexit, EU leaders have been lining up to warn that Britain will not be allowed to "cherry pick" deals and ...
Low food prices continue to hold back inflation rates in the UK as the supermarket price war continues in the face of rising import costs. ...
- Interview: Mondelez eyes sweet success in China
- The benefits of engaging staff in sustainability
- How food companies involve staff in sustainability
- Why Danone is withdrawing Dumex from Vietnam
- How PepsiCo is taking action on palm oil
- 2 Sisters chief Boparan buys Bernard Matthews
- Fonterra says value-added strategy paying off
- B&G Foods acquires ABF's US spice business
- General Mills profit falls as sales disappoint
- MP calls for probe into Bernard Matthews "sale"
- The Big 15: Strategies and Priorities of Top Packaged Food Players in Comparison
- Global Chocolate Confectionery Overview: Challenges, Opportunities and Risks
- Global Foodservice Market 2016-2020
- Global Food and Drinks Closures: Performance and Opportunities
- Fast Food Restaurants in the US - Industry Market Research Report