Family Dollar Stores, Inc. (FDO) at Takeover Impasse Due to Differing Opinions about Wal-Mart Stores, Inc. (WMT)

Wal-Mart Stores, Inc. (NYSE:WMT) may be avoiding a major challenger to their retailer enterprise (or at least a segment of it) simply by being a contentious point amongst the two entities that could otherwise join forces to possibly topple them. According to Jeffrey McCracken on Bloomberg yesterday, the impasse over antitrust concerns related to a possible merger between Family Dollar Stores, Inc. (NYSE:FDO) and Dollar General Corp. (NYSE:DG) is due to the difference in opinion each company has over Wal-Mart Stores, Inc. (NYSE:WMT)’s relevance as a competitor.


“It’s funny, because Dollar General feels like Wal-Mart is very relevant here, and what they’re going to argue is ‘hey, put Dollar General, the number one discount retailer together with the number two, and we can take on Wal-Mart’. What Family Dollar feels is Wal-Mart is not relevant. They feel like they’re such a low price seller, or their consumer is such a low-end consumer, they don’t even go to Wal-Mart, and Wal-Mart’s not relevant,” McCracken said.

That difference is huge when it comes to antitrust concerns. Family Dollar Stores, Inc. (NYSE:FDO) is certain that a merger with Dollar General Corp. (NYSE:DG) would get shot down by regulators because it would create a monopoly within their industry. They’ve instead chosen to accept a less lucrative takeover offer from Dollar Tree, Inc. (NASDAQ:DLTR), the third largest discount retailer, and one whose operations are a more seamless fit with theirs.

Dollar General Corp. (NYSE:DG) on the other hand feels their industry includes Wal-Mart Stores, Inc. (NYSE:WMT) and other big-box retailers, and that a merger with Family Dollar Stores, Inc. (NYSE:FDO) would not even register on the antitrust scale because of Wal-Mart Stores, Inc. (NYSE:WMT)’s own size. They’ve forced a hostile takeover bid on Family Dollar Stores, Inc. (NYSE:FDO) after their most recent takeover offer was denied.

As it is, regulators will likely now end up getting their say, as Dollar General Corp. (NYSE:DG) has started the process of antitrust review by the FTC, and should be able to delay the merger between Family Dollar Stores, Inc. (NYSE:FDO) and Dollar Tree, Inc. (NASDAQ:DLTR) long enough to have their findings heard; findings that will be great interest to all involved, including Wal-Mart Stores, Inc. (NYSE:WMT).

Disclosure: none