September 10, 2014
Since Family Dollar’s board of directors unanimously rejected Dollar General’s second and sweetened tender offer from September 2, Dollar General has decided to make the tender offer directly to the company’s shareholders.
The company’s all-cash offer of $80 per share beats Dollar Tree’s offer of $74.50 per share cash/stock offer originally made July 28. The Family Dollar board has rejected both Dollar General’s offers on the basis of antitrust regulatory considerations.
But Dollar General is appealing to Family Dollar’s shareholders with approximately $640 million of additional aggregate value over Dollar Tree’s offer – a premium of 31.9% over the closing price of $60.66 for Family Dollar stock on the day prior to the Dollar Tree announcement.
As part of a definitive merger agreement with Family Dollar, Dollar General would be willing to agree to divest up to 1,500 stores if required by the FTC and to pay Family Dollar a $500 million reverse breakup fee if the transaction does not close for reasons related to antitrust approvals.
The offer is not conditioned upon any financing arrangements, according to Dollar General, which added that it has received written financing commitments that are in full force and effect from Goldman, Sachs & Co. and Citigroup Global Markets for all the financing necessary to consummate the proposed all-cash transaction.
“Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares,” said Rick Dreiling, chairman and CEO of Dollar General. “By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer. Additionally, we now can begin the antitrust review process and will have an opportunity to present our position directly to the FTC. As we previously have stated, we are confident in the results of our antitrust analysis, and we look forward to a constructive dialogue with the FTC.”
Meanwhile, the Family Dollar board has confirmed that it will review and consider Dollar General’s latest move in accordance with applicable law, and advise shareholders of its position regarding the tender offer by making available to shareholders, and filing with the Securities and Exchange Commission, a solicitation/recommendation statement on Schedule 14D-9.
“Applicable securities laws prevent Family Dollar from making any further comments on Dollar General’s tender offer or its terms until after this filing is made on Schedule 14D-9 which will be no later than September 23, 2014. Until that time, Family Dollar shareholders are advised to take no action,” the board said in a statement, adding only that it has not changed its recommendation in support of the merger with Dollar Tree.”
Source: Retailing Today
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