Family Dollar Stores, Inc. (FDO) Rejects Dollar General Corp. (DG) Bid in Favor of Dollar Tree, Inc. (DLTR)’s Offer Citing

When Dollar General Corp. (NYSE:DG) recently outbid Dollar Tree, Inc. (NASDAQ:DLTR) for acquiring Family Dollar Stores, Inc. (NYSE:FDO), the Street expected Family Dollar Stores, Inc. (NYSE:FDO) to go with it. In a surprise move though Family Dollar Stores, Inc. (NYSE:FDO) has rejected Dollar General Corp. (NYSE:DG)’s bid, citing antitrust regulation and plans to go ahead with Dollar Tree, Inc. (NASDAQ:DLTR)’s offer. Robin Lewis, Co-Author of “The New Rules of Retail” discussed about Family Dollar Stores, Inc. (NYSE:FDO) decision on Bloomberg, recently.

“First of all, the three of them separately and aggregately have been a juggernaut, enormous pressure on Wal-Mart, taken a huge share away from them. I do think a merger of two of the three will just increase that juggernaut and I think that perhaps will happen. Family Dollar Stores, Inc. (NYSE:FDO) may be raising the ante, but we will see,” Lewis said.

Lewis feels that antitrust regulation is not necessarily a problem, since antitrust issues haven’t been raised in a lot of mergers and acquisitions that took place in the past owing to the state of the economy. Lewis mentioned that the concern of Family Dollar Stores, Inc. (NYSE:FDO) to sell 700 of its stores if it has to merge with Dollar General Corp. (NYSE:DG)  might just be a case where Family Dollar Stores, Inc. (NYSE:FDO) already has 700 underperforming stores that it could target to sell.

According to Lewis, Family Dollar Stores, Inc. (NYSE:FDO)  rejecting Dollar General Corp. (NYSE:DG)’s bid and going with Dollar Tree, Inc. (NASDAQ:DLTR)’s offer might be an antitrust issue, but it can also be very well a move from Family Dollar Stores, Inc. (NYSE:FDO) to raise the bids even higher. As of now, the Street is rife with speculations of whether Dollar General Corp. (NYSE:DG) will raise its bid or not.

Disclosure: None