Dollar General, Dollar Tree Still Quibbling Over Family Dollar

By Christine Kern, contributing writer

Dollar General balking at FTC number of  4,000 divested stores; Dollar Tree says it will divest “as many stores as necessary” to complete acquisition

In the ongoing saga of the acquisition of Family Dollar Stores Inc, the FTC has told Dollar General that it may have to divest as many as 4,000 stores before it will approve the stalled $9.1 billion merger proposal, The New York Post reported.

According to sources close to the issue, some FTC staff are worried that the two chains are basically competing with each other, not with Walmart, drugstores, or supermarkets, thus potentially creating a monopoly.  One source explained, “The question is whether the [vastly increased] number of divestitures will allow [Dollar General’s] deal to work financially.”

Meanwhile, rival Dollar Tree, who has also offered an acquisition deal for Family Dollar, wants the FTC to rule now on the measure, hopefully pressuring Dollar General out of the equation and making room for Family Dollar to accept Dollar Tree’s offer. 

According to Reuters, Dollar Tree offered an $8.5 billion deal in July, which was rejected by Family Dollar.  Dollar Tree had said in July that it would divest up to 500 stores, but has also assured that it would divest “as many stores as necessary” to obtain antitrust approval for the sale.  Dollar Tree remains confident that it would have to divest fewer stores than anticipated – and fewer stores than Dollar General – in order to satisfy the FTC.

Reuters reported that Dollar Tree Chief Executive Bob Sasser said the company now expected to reduce its current store count of 5,282 by less than 500 and that the divestitures would not materially affect its business.

Dollar General has stated that it was prepared to divest as many as 1,500 stores to complete the sale. According to The New York Post, Dollar General could be forced either to raise its bid again or to divest more than double the number of stores previously pledged.

Achieving an FTC reversal in position could take up to six months, but rival Family Dollar is pushing for a vote by December 31, according to insiders, a move that could possibly open the door to a reconsideration of Family Dollar’s bid.

Currently, Dollar General and Family Dollar operate a total of 20,000 stores. Regulators are concerned a merger would eliminate price competition.