Dollar Tree revises its merger agreement with Family Dollar

Chesapeake-based Dollar Tree Inc. doesn’t want any potential antitrust issues to block its efforts to acquire North Carolina based Family Dollar.

Dollar Tree announced Friday that the two companies had amended their late July merger agreement to allow selling off  “as many stores as necessary or advisable” to get antitrust clearance on the deal.

The original agreement between the two dollar store companies had allowed Dollar Tree to scuttle the deal if it had to sell off more than 500 stores to meet antitrust requirements.
In amending their agreement, Dollar Tree and Family Dollar also said they plan to complete the merger in November instead of early next year.

These moves are part of the bidding war for Family Dollar (the second-ranked dollar store in terms of sales) between Dollar Tree (the third-ranked dollar store retailer) and the top chain, Tennessee-based Dollar General.

After Family Dollar accepted Dollar Tree’s $74.50 a share offer, Dollar General upped the ante in August with a bid of $78.50 a share and then made a revised offer on Wednesday. Each time Family Dollar has rebuffed Dollar General, citing antitrust concerns.

The latest Dollar General bid was designed to quiet those reservations, increasing the number of stores it was willing to divest to seal the deal and offering Family Dollar a $500 million breakup fee if antitrust problems wrecked the merger.

“Our amended agreement is clearly superior to Dollar General's revised proposal based on antitrust risk, deal certainty and time value of money,” Bob Sasser, Dollar Tree's CEO, said in a statement. “Unlike Dollar General, we expect to be required to divest few, if any, stores because our business model is significantly different from Family Dollar's model. Our product assortment and pricing is not driven by local competition, and we have very limited store overlap.”

Dollar Tree expects a merger with Family Dollar to create a company with $18 billion in annual sales and 13,000 stores.

A combination of Family Dollar and Dollar General would produce a retailer with 20,000 stores and more than $28 billion.