Dollar General Makes Play for Family Dollar

GOODLETTSVILLE, Tenn. – Dollar General Corp. offered to buy competitor chain Family Dollar Stores Inc. for $9.7 billion, or $78.50 per share in cash. The company made its proposal in a letter delivered to Family Dollar's board of directors.

The offer challenges Dollar Tree Inc.'s recent agreement to acquire Family Dollar for $8.5 billion, or $74.50 per share.

"For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares," stated Dollar General Chairman and CEO Rick Dreiling. "For Dollar General shareholders, the proposed combination of Dollar General and Family Dollar would be a significant strategic opportunity to create immediate and lasting shareholder value. For both Dollar General and Family Dollar customers, we would be able to provide better value and greater selection."

In its proposal letter, Dollar General outlined multiple reasons that a merger between the two companies would provide value to both shareholders and customers, including a solidified position as the lead small-box discount retailer; complementary business models; clear operational synergies and integration plan; a tenured management team that has a proven track record; and significant earnings accretion through synergies.

Dollar General operates more than 11,500 stores in 40 states, while Family Dollar operates more than 8,000 stores in 46 states.

"We have the utmost respect for Family Dollar, its leadership and its employees. We look forward to expeditiously entering into constructive discussions with Family Dollar in order to sign a definitive merger agreement that provides enhanced value to Family Dollar shareholders and enables Dollar General to realize the benefits of this combination," Dreiling said.

The full text of Dollar General's proposal letter is available here.