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Family Dollar Stores, Inc. (NYSE:FDO) Receives Improved Takeover Bid from Dollar General Corp. (NYSE:DG)

Boston, MA 09/03/2014 (wallstreetpr) – Family Dollar Stores, Inc. (NYSE:FDO) Dollar might find itself in a tricky situation with its shareholders after Dollar General Corp. (NYSE:DG) tabled an improved bid that looks set to derail a deal with another discounter. The Los Angeles Times reports that a $9.1 billion takeover-bid was’ tabled by Dollar General.

Dollar General Willing to Close some Stores

Earlier last month, Family Dollar turned down Dollar General’s $8.9 billion takeover offer, opting to go with a less lucrative deal worth $8.5 billion from Dollar Tree, Inc. (NASDAQ:DLTR). The latest bid by Dollar General raises questions as to whether Family Dollar will pursue its preference, or it will go with a deal that guarantees maximum value to shareholders.

Family Dollar Stores, Inc. (NYSE:FDO) had turned down Dollar General Offer claiming that the deal had little chances of going through with antitrust regulators. Dollar General Aggressive push for the merger has seen it suggest that it is more than willing to close up to 1,500 stores if the Federal Trade Commission asks for the same. Dollar General had already committed to divesting as many as 700 stores as one of the ways of ensuring the merger went through.

Increased Competition from Wal-Mart

The bidding war between Dollar General and Dollar Tree comes at a time when the level of competition has increased from large retail store, Wal-Mart Stores, Inc. (NYSE:WMT). Deep Discounters are also struggling with the slow recovery of the economy from the financial crisis. Family Dollar is’ quoted as saying that its board will review Dollar General latest bid awaiting to see the outcome.

Wal-Mart is already increasing its small-format stores, which are one-quarter the size of its supercenters as it looks to attract more customers resulting in increased competition for Dollar Stores. Analysts are of the opinion that Family Dollar Stores, Inc. (NYSE:FDO) will have to merge with Dollar General Corp. (NYSE:DG) if it is to stand a chance of fending off competition from Wal-Mart.

Published by Lisa Ray

Lisa has a Bachelor of Arts in journalism from Purdue University and 3 years of experience in the publishing field.

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