Dollar General Corp. (DG) Gets Hostile; Launches Takeover Bid for Family Dollar Stores, Inc. (FDO)

Dollar General Corp. (NYSE:DG) is not going away quietly after their updated takeover offer was rejected last week by Family Dollar Stores, Inc. (NYSE:FDO). Dollar General Corp. (NYSE:DG) today announced that they’ve launched a hostile bid in an attempt to take the fight directly to Family Dollar Stores, Inc. (NYSE:FDO)’s shareholders.

The tender offer to shareholders of $80 per share is the same as the updated offer they provided Family Dollar Stores, Inc. (NYSE:FDO)’s management last week, which was again rejected by their board in favor of their existing agreement with Dollar Tree, Inc. (NASDAQ:DLTR), valued at just $74.50 per share. Family Dollar Stores, Inc. (NYSE:FDO) again cited antitrust concerns in their rejection of the deal, despite an amended proposal that included a $500 million “reverse break-up” fee, if the deal was not approved by regulators.

The tender offer is on the table for shareholders until October 8, and places a premium of over 1% on the company’s shares, which entered trading today at $78.70, and a more than 30% premium on their value as of July 25, before the announcement of the Dollar Tree, Inc. (NASDAQ:DLTR) offer. Dollar General Corp. (NYSE:DG)’s initial offer for Family Dollar Stores, Inc. (NYSE:FDO) was valued at $78.50 per share.

Dollar General Corp. (NYSE:DG) announced  that they will immediately file for clearance under the Hart-Scott-Rodino Act, allowing them to begin the antitrust approval process with the FTC, where they are confident in their position based on the antitrust analysis they have performed. If nothing else, the discussions with the FTC should allow Dollar General Corp. (NYSE:DG) to better understand what divestitures may need to be made to allow clearance of the deal, while essentially blocking the Family Dollar Stores, Inc. (NYSE:FDO) and Dollar Tree, Inc. (NASDAQ:DLTR) agreement from being consummated.

Dollar General Corp. (NYSE:DG) has announced that they would be willing to close as many as 1,500 stores  if required to do so by the FTC, an amount that Family Dollar Stores, Inc. (NYSE:FDO) has contended would not be enough to gain approval.

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