Dive Brief:
-
Dollar Tree Inc. said on Monday it expected to sign an agreement with the U.S. Federal Trade Commission regarding how many stores it would have to close in any merger deal with rival discount chain Family Dollar. The retailer said it expects the number to be about 300 of its 5,282 stores in the U.S. and Canada.
-
Dollar Tree wrote a letter to Family Dollar shareholders urging them to vote on the agreement, which is $8.5 billion in cash and stock, or risk losing the offer. A vote is scheduled Jan. 22 and has been delayed twice.
-
Dollar General has offered a heftier $9.1 billion, but Family Dollar has consistently said that the problem with that offer is that its rival wouldn’t be willing to offload the number of stores likely to be required by the FTC in any deal.
Dive Insight:
With Dollar Tree and the FTC in agreement regarding the number of stores that should be closed in any buyout of Family Dollar, it’s clear that between the two offers, Dollar Tree’s is the more viable one. This, of course, is something that Family Dollar has maintained since rejecting Dollar General’s offers. None of these details is particularly fresh or surprising, but the clock is ticking — and Dollar Tree has apparently had enough dilly-dallying. On Monday, Family Dollar’s share price fell below its takeover offer, an indication that expectations of the sale fetching a higher price have dimmed.
”After two delays, we have been more than reasonable but have reached the end of our patience," Dollar Tree CEO Bob Sasser said in a letter to Family Dollar.
As for those 300 Dollar Tree stores that would likely be closed, Rahul Sharma, managing director of investment firm Neev Capital, told Reuters that Wal-Mart Stores Inc. and Target could both be potential buyers because both retailers are expanding their numbers of smaller stores.