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MATTHEWS, N.C. – Family Dollar Stores Inc. rejected Dollar General Corp.'s rival acquisition bid, estimated at $9.7 billion, in favor of its existing $8.5-billion merger agreement with Dollar Tree Inc., the Associated Press reported.
Family Dollar CEO Howard Levine cited concerns about antitrust issues in a statement responding to the Dollar General offer made on Aug. 18.
"Our board of directors, with the assistance of outside advisers and consultants, has been carefully analyzing the antitrust issues in a potential combination with Dollar General since the beginning of this year," Levine said. "Our board reviewed, with our advisers, all aspects of Dollar General's proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed."
The Family Dollar board of directors voted unanimously to reject the Dollar General proposal, according to media reports.
The rejection followed a second letter from Dollar General to Family Dollar, delivered Wednesday, in which Dollar General Chairman and CEO Rick Dreiling highlighted "important facts" about the two companies' previous interactions and declared his confidence that a merger would succeed. The full text of the second letter is available here.
"We are disappointed that the Family Dollar board of directors has concluded that our proposal is not reasonably expected to lead to a superior proposal without informing itself of all relevant information," Dreiling said in a released statement. "We have done extensive antitrust analysis using experienced advisers, the results of which confirm that the transaction as proposed is capable of being completed. We remain willing to share this analysis with Family Dollar and its counsel, and are confident that we will be able to quickly and efficiently resolve any potential antitrust issues."
Dreiling added that the company is carefully reviewing and considering its options, and reiterated that Dollar General believes its all-cash proposal is superior to the agreement with Dollar Tree. Under the terms of the existing agreement, Dollar Tree will pay $8.5 billion or $74.50 per share for Family Dollar.