Family Dollar Stores (FDO)’s Deal with Deal With Dollar Tree (DLTR) Surprised Dollar General (DG)

The proxy from Family Dollar Stores, Inc. (NYSE:FDO) was the subject of discussion on CNBC’s “Squawk on the Street” where the crew talked about the surprise for Dollar General Corp. (NYSE:DG) as it was not aware of a deal coming up between Family Dollar and Dollar Tree, Inc. (NASDAQ:DLTR).

The proxy also offered more information on the merger talks and even backdated them to 2011.

“Proxy for Family Dollar came out, they got it out pretty quickly and in the proxy, you will see the background of the merger, and it goes on and on starting back in 2011 with Nelson Peltz,” said one of the crew.

According to “Squawk on the Street”, what is in the proxy confirms a lot of what has been there before, especially since Family Dollar Stores, Inc. (NYSE:FDO) sealed a deal with Dollar Tree, Inc. (NASDAQ:DLTR). The retailers agreed to join forces after shareholders on both sides unanimously supported such a move.

As such, Family Dollar Stores, Inc. (NYSE:FDO) will receive $8.5 billion in cash and stock from Dollar Tree, Inc. (NASDAQ:DLTR). On a per share basis, it means $74.50 for Family Dollar shareholders, which also means 23% premium on the price of Family Dollar on the last closing day before the deal was made public.

The CNBC crew went on to say that the Family Dollar’s proxy confirms what they have mostly reported about Dollar General Corp. (NYSE:DG), especially whether it was aware of a coming deal or not. According to the proxy, Dollar General was not aware that a deal was coming.

In fact, the crew recalled that as recently as June 19 Dollar General Corp. (NYSE:DG) distanced itself from a deal with Family Dollar Stores, Inc. (NYSE:FDO), citing that they were not in a strategic transaction.

“Now, since the deal has occurred, as I reported, many of their large shareholders have called them up and said, “you have got to decide to get up to this even without a CEO next year” […].”

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