Dollar General Sweetens Bid for Family Dollar

GOODLETTSVILLE, Tenn. -- Dollar General Corp. has upped the ante in its bid for rival Family Dollar Stores Inc.

Under the terms of the revised proposal, Dollar General would increase its all-cash proposal for all outstanding shares of Family Dollar to $80 per share. Dollar General also increased the number of stores it would be willing to divest to 1,500 if ordered by the Federal Trade Commission (FTC) and has agreed to pay a $500-million reverse break-up fee to Family Dollar related to antitrust matters. All other terms and conditions of the proposal remain unchanged.

Dollar General's original proposal, submitted Aug. 18, called for the divestiture of 700 stores.

The Goodlettsville-based company's sweetened bid comes a little more than a week after Family Dollar rejected the original bid in favor of its existing $8.5-billion merger agreement with Dollar Tree Inc. Under the terms of the existing agreement, Dollar Tree will pay $74.50 per share for Family Dollar, as CSNews Online previously reported. At the time, Family Dollar CEO Howard Levine cited concerns about antitrust issues in the board's unanimous decision to turn down the Dollar General offer.

According to Dollar General, the company began its antitrust analysis more than a year ago and since making its proposal, it has further refined its antitrust analysis with its counsel, Simpson Thacher & Bartlett LLP, and its economist, Compass Lexecon.

In addition, Dollar General has engaged additional counsel, Boies, Schiller & Flexner LLP, to independently review its antitrust work. The independent review validated Dollar General's analysis that the proposed transaction can be completed on the terms previously proposed.

"We are confident that our enhanced proposal sufficiently addresses any concerns that led Family Dollar's board of directors to reject our prior proposal without any discussions between our companies," said Rick Dreiling, Dollar General's chairman and CEO. "Even as a secondary antitrust review supported our previous proposal, we revised our offer to demonstrate the seriousness of our commitment.

"Our revised proposal provides Family Dollar shareholders with significantly increased value over the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares. If the Family Dollar board fails to seize this opportunity to maximize value for its shareholders, we will consider taking our superior proposal directly to the Family Dollar shareholders," he added.

Goldman, Sachs & Co. is acting as financial advisor to Dollar General and Simpson Thacher & Bartlett is acting as its legal counsel.

Family Dollar's board acknowledged receiving the revised proposal and will review it in consultation with its legal and financial advisors. The company said it will have no further comment on Dollar General's proposal until the board completes its review.

Morgan Stanley & Co. LLC is serving as exclusive financial advisor to Family Dollar and Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel.

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