Family Dollar Stores Inc. (NYSE: FDO) is nearing the end of its hunt for a merger partner, and prospects are looking brighter for Dollar Tree Inc. (NASDAQ: DLTR), while Dollar General Corp. (NYSE: DG) seems to be slipping to the wayside. A recent analyst call shed more light on what the future holds for these dollar giants.

Currently, Dollar Tree is the front-runner to takeover Family Dollar. However, the Family Dollar shareholders ultimately will decide the fate of this transaction on January 22. It is worth noting that shareholders also voted by a large margin in December’s voting session to reexamine Dollar General’s offer.

The key factor in determining who would be the merger partner in this case was the level of divestiture that the companies would have to sustain. Previously, Dollar General said that it would divest up to 1,500 stores, but Dollar Tree stated that it would commit to whatever amount of divestiture was required.

In the past week, Family Dollar estimated that Dollar General would have to divest about 3,500 to 4,000 stores in order for the merger to receive regulatory approval.

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Further adding fuel to the fire, Dollar Tree had previously said that the FTC has expressed concerns about Family Dollar’s current pricing rules, under which certain stores may increase prices if a Dollar Tree store is not nearby, about certain overlaps between Family Dollar and Dollar Tree’s multi-price Deals stores, and certain areas where the two stores face limited competition.

Comparing the offers, Dollar General is making a $9.15 billion proposal, while Dollar Tree’s proposal is sized at $8.73 billion. However, what is making the Dollar Tree proposal more appealing at the moment is the fact that regulators are more likely to allow it. At the same time, it will not require as many divestitures.

In a recent analyst call, Jeffries downgraded Family Dollar to a Hold rating and lowered its price target to $76 from $85. The report also detailed that future bids from Dollar General should not be expected because the company did not increase its store divestiture or purchase price. Seemingly this would take it out of the race.

Family Dollar board members have spoken out and entirely back the Dollar Tree deal.

Dollar General saw its shares down 0.5% at $67.29 in early afternoon trading on Tuesday. The stock has a consensus analyst price target of $75.33 and a 52-week trading range of $53.00 to $71.78. The company has a market cap of $20 billion.

Shares of Family Dollar were relatively flat at $75.15. The consensus price target is $73.35, and the 52-week trading range is $55.64 to $80.97. Family Dollar has a market cap of over $8 billion.

Dollar Tree shares fell about 0.6% at $66.31. The consensus analyst price target is $70.41, and the 52-week trading range is $49.59 to $71.53. The company has a total market cap of over $13 billion.

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