Dollar General Corp. (NYSE:DG), the Tennessee-based discount retailer, announced its second-quarter earnings today. The company posted earnings per share value of $0.83 which was in line with the estimates. However, its reported revenue of $4.72 billion was lower than the consensus of $4.765 billion. With its bidding war with Dollar Tree, Inc. (NASDAQ:DLTR) for Family Dollar Stores, Inc. (NYSE:FDO) still going on in full force, Anthony Chukumba, Senior Research Analyst at BB&T Capital Markets shared his opinion about the proceedings on CNBC’s Earnings Central.
Chukumba felt strongly that acquiring Family Dollar Stores, Inc. (NYSE:FDO) is a must for Dollar General Corp. (NYSE:DG) not only from an earnings point of view but also to prevent Dollar Tree, Inc. (NASDAQ:DLTR) from acquiring it. This was because the combined force of Family Dollar and Dollar Tree will be too hot to handle for Dollar General.
“[…] Dollar General having to compete with Family Dollar run by Dollar Tree’s much more talented management team is a nightmare scenario for Dollar General and I think that these results underscore that,” he explained.
Chukumba was positive that Dollar General Corp. (NYSE:DG) can raise its bid for Family Dollar Stores, Inc. (NYSE:FDO) to about $80 a share. But as the North Carolina based company had clearly stated earlier, the problem was not the value of the bid but the risk of antitrust regulators blocking it. Dollar Tree, Inc. (NASDAQ:DLTR), the Virginia based discount store, had announced its interest in acquiring Family Dollar for $74.50 a share in July following which, Dollar General came up with an unsolicited bid for $78.50 a share.
“The issue with Family Dollar Stores, Inc. (NYSE:FDO) wasn’t the bid. The bid was $4 a share higher than Dollar Tree, Inc. (NASDAQ:DLTR)’s bid. It was the fact that there was not a lot of protection for Family Dollar’s shareholders from an antitrust perspective,” he elucidated.
Disclosure: none
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