Boston, MA 08/19/2014 (wallstreetpr) – A chain of merchandise retail discount store operator Family Dollar Stores, Inc. (NYSE:FDO) is in the midst of a buyout offer from Dollar Tree, Inc. (NASDAQ:DLTR) and Dollar General Corp. (NYSE:DG). It would have been a smooth sailing for Dollar Tree having struck a definitive merger deal that was announced on July 28. However, the entry Dollar General in the bidding fray on August 18 with a higher price has changed the complexion of the merger scenario.
Now, Family Dollar is a most sought after company since it would offer ready-made expansion of business for both the companies. The M&A scene would have got still more interesting if only the retailer giant Wal-Mart Stores, Inc. (NYSE:WMT) too joined the party. However, Bloomberg reported that the company is unlikely to bid for Family Dollar after an internal review since it would not fit into its scheme of things.
Options Before FDO
Family Dollar indicated that it would carefully review and consider Dollar General Corp. (NYSE:DG) Proposal to acquire it at $78.50 a share or $9.7 billion in all cash offer after consulting its financial and legal advisors. The company had already struck a definitive merger deal with Dollar Tree of cash and stock that was worth $74.50 a share or $8.5 billion.
There is no doubt that Dollar General Proposal is superior to Dollar Tree. Therefore, Family Dollar has no choice but to accept the proposal since it cannot deprive the shareholders of additional value. The agreement between Family Dollar Stores, Inc. (NYSE:FDO) and Dollar Tree does not appear to have termination charges, which would allow the company to move ahead without boring about cancellation of agreement. Dollar General was also willing to enter into constructive negotiations, which meant that it was ready to address any issues that FDO might have.
Alternatively, Dollar Tree would be forced to either match or top the offer made by Dollar General to keep the existing merger deal in tact. This might force Dollar General to lift its bidding price too. Currently, the odds are definitely seems to be in favor of Dollar General Corp. (NYSE:DG).