Boston, MA 10/03/2014 (wallstreetpr) – Will Dollar General Corp. (NYSE:DG)’s move to extend the tender offer to October end from October 8 to buy Family Dollar Stores, Inc. (NYSE:FDO) be fruitful? The company offered a price of $80 a share in cash to buy Family Dollar though the latter rejected it citing anti-trust provisions.
According to the statement of Dollar General Corp. (NYSE:DG), it has got 126,499 shares of Family Dollar at the end of September month. This suggests that the response was very poor though one may argue that the rush towards surrendering the shares would be more when the expiry date draws closer.
However, looking from the overall outstanding shares of 303.4 million, the surrendered shares do not represent even one percent of it. Therefore, investors seem to be ready to side with the company’s statement that it preferred Dollar Tree, Inc. (NASDAQ:DLTR) over Dollar General despite lower price offer.
Family Dollar Stores, Inc. (NYSE:FDO) and Dollar Tree struck an agreement first allowing Dollar True to buy Family Dollar. The company offered a price of $74.50 a share, which was $5.50 lower than Dollar General. Family Dollar believes that going along with Dollar General would invite the higher risk of regulatory issues, including anti-trust.
While Dollar General Corp. (NYSE:DG)’s price indicated a total valuation of $9.1 billion, Dollar Tree’s offer price suggested $8.5 billion valuation for Family Dollar. Despite this, Family Dollar chose to go with Dollar Tree. Family Dollar is yet to convene a special meeting of the shareholders to approve the Dollar Tree deal.
It does appear that Family Dollar was dithering to hold shareholders meeting. This is probably due to the belief that once the regulator approves its deal with Dollar Tree, it would be in a comfortable position with the shareholders to seek their vote in favor the deal. Therefore, the company appears to be holding a meeting in November or December, according to New York Times.
As far as Dollar General Corp. (NYSE:DG), the current situation indicates that it would be a Herculean task for it to convince the Family Dollar shares on the prospects of getting regulatory approvals. Assuming that Dollar Tree offer was approved by regulators, Dollar General could argue that it too stands a chance to win regulatory approvals. In such a situation, shareholders hold key to a major decision.