Boston, MA 08/28/2014 (wallstreetpr) – The competition in dollar store seems to be rising high, as more companies jump into the cut-throat competition bandwagon. Dollar General Corp. (NYSE:DG), which has been facing a slowdown, has entered into the picture of competition now. It had offered $78.50 per share price for acquisition of Family Dollar Stores, Inc. (NYSE:FDO), a premium of $4 a share in comparison to the cash and stock bid of Dollar Tree, Inc. (NASDAQ:DLTR).
Family Dollar had however rejected Dollar General’s counteroffer in the previous week, despite the fact that Dollar Tree’s rough quarterly results had also affected its stock price. Dollar General, in the meanwhile, can release its quarterly results anytime today. Even though the results will not affect its all-cash bid for Family Tree, but it is surely to highlight how urgent this deal is for the company.
Expected quarterly results of Dollar General
Among various analysts polled by FactSet Research Systems Inc. (NYSE:FDS), majority believe that Dollar General shall be reporting Earnings per Share of 83 cents, a downfall from 88 cents forecast in the beginning of this year. However, this shows an increase from previous year’s 75 cents a share EPS. Nevertheless, as far as the year-over-year same-store-sales growth is concerned, there has been a decrease to 2.8% from the 5.1% pace of previous year.
Wal-Mart Stores, Inc. (NYSE:WMT) recently ended up in five-quarter streak of downfall in the U.S. business, putting forth a very flat result. Wal-Mart is now planning on taking baby steps with opening of new shops which are meant to mint money in the appeal and allure of dollar stores. This means that there are potential synergies from the tie-up between Dollar General and Family Dollar.
Dollar Tree with the Different Customer Base
Even though, all the three stores involved in the deal have “Dollar” in their name, but the fact is that Dollar Tree has different customer base and so, it derives lesser benefits. In fact, its share price also went down after its bid and the share price of Dollar General, on the contrary is higher.